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Inside Amazon’s Growth Strategy

If the key to success is focus, why does Amazon work?

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Since Amazon started as an online retailer in 1994, it has expanded into streaming, cloud computing, content creation, and even groceries. But traditional business strategy tells us that the key to success is focus. So, why does Amazon work?

“I think in Amazon’s case, everything is very tightly connected. If you remove one part, the whole becomes less,” says Harvard Business School professor Sunil Gupta . “That’s the key question: are the pieces fitting together nicely, or they just happen to be another business because it’s profitable?”

Gupta has studied Amazon’s growth strategy and he tells Cold Call host Brian Kenny how Amazon looks beyond traditional industry boundaries to define their competitors and why connecting products and services with their customers is at the core of their strategy.

Key episode topics include: business models, growth strategy, operations and supply chain management, innovation, technology and analytics, online retail, customer-centricity, customer experience, competitive strategy.  

HBR On Strategy curates the best case studies and conversations with the world’s top business and management experts, to help you unlock new ways of doing business. New episodes every week.

• Listen to the original HBR Cold Call episode: If the Key to Business Success Is Focus, Why Does Amazon Work? (May 2019)
• Find more episodes of Cold Call .
• Discover 100 years of Harvard Business Review articles, case studies, podcasts, and more at HBR.org .

HANNAH BATES: Welcome to HBR On Strategy , case studies and conversations with the world’s top business and management experts, hand-selected to help you unlock new ways of doing business. Amazon started as an online retailer back in 1994. Since then, it has expanded into streaming, cloud computing, content creation, and even groceries. But if traditional business strategy tells us that the key to success is focus – why does Amazon work ? Today, we bring you a conversation with Harvard Business School professor Sunil Gupta – who has studied Amazon’s growth strategy. You’ll learn how Amazon builds its business around its customers — rather than its products and services. You’ll also learn how they look beyond traditional industry boundaries to define their competitors – and why connecting products and services with their customers is at the core of their strategy. This episode originally aired on Cold Call in May 2019. Here it is.

BRIAN KENNY: In the world of computer science, Jon Wainwright is kind of a big deal. A pioneer of computer languages, he was the principle architect of both Script 5 and Manuscript. What makes Jon a legend has nothing to do with programming. Let me explain. On April 3, 1995, Jon was in need of some work-related reading material. So, he fired up his T1 modem and navigated the fledgling internet to the beta version of a new online bookstore. With the click of a mouse, he became the very first customer to make a purchase on Amazon.com. Fluid Concepts and Creative Analogies, the book he purchased, never became a best seller. But Amazon took off like a rocket ship and hasn’t slowed down since. With a market cap larger than all other retailers combined, including Walmart, Amazon owns 49% of all online sales. In the time it takes me to read this introduction, the company will earn over 300,000 dollars. Will we ever see the likes of it again? Today, we’ll hear from professor Sunil Gupta, about his case entitled, “Amazon in 2017.” I’m your host Brian Kenny. You’re listening to Cold Call, part of the HBR Presents network. Sunil Gupta is an expert in the area of digital technology and its impact on consumer behavior and firm strategy. He is the author of the recently published, Driving Digital Strategy, a guide to re-imagining your business. This case is the perfect stepping off point to cover some of the ideas in that book, Sunil. Thank you for joining me today.

SUNIL GUPTA: Thank you for having me.

BRIAN KENNY: This is your second spin I think on Cold Call. We appreciate you coming back.

SUNIL GUPTA: I enjoy doing this.

BRIAN KENNY: Good, as long as it’s not too painful for you. I like having you here. I’ve had an opportunity to read the book. The case I think is really kind of a great foundational piece to launch into some of the ideas. I’m going to assume anybody listening to this podcast has purchased something on Amazon or watched something on Amazon Prime. I had forgotten about their modest beginnings and just how much they’ve grown and expanded and changed. The case was a great reminder of that. We’ll get into some of that. Let me start by asking you, just to set it up for us. What led you to write the case?

SUNIL GUPTA: As you said, everybody knows Amazon. At the same time, Amazon has become quite complex. I mean, they have gone into businesses that defy imagination. That raises the question, is Amazon spreading itself too thin? Are they an online retailer? Are they video producers? Are they now making movies? In strategy, we learn, everybody should focus. Obviously Jeff Bezos missed that class.

BRIAN KENNY: He didn’t come to HBS by the way.

SUNIL GUPTA: You sort of start wondering as to, what is the magic behind this? What is the secret sauce that makes Amazon such a huge success? The market gap almost touched a trillion dollars a few months ago.

BRIAN KENNY: Insane.

SUNIL GUPTA: That was the reason why I thought A, everybody knows about it, and B, it’s hugely successful and C, his business model seems to defy logic.

BRIAN KENNY: The case we know by the title takes place in 2017. Maybe you can just start us off by setting it up. How does the case open up?

SUNIL GUPTA: At that point in time, Amazon had just bought Whole Foods, which was very counterintuitive because Amazon has been an online player. So why is it getting into offline business? That was against his grain as an online player. The second thing is food is a very low margin category. You sort of say, Amazon is a technology company, its stock is going to stratosphere. Why buy a low margin business that Amazon actually had been trying Amazon Fresh for 10 years and hasn’t succeeded? Why don’t they give up? That was a starting point. But of course, the case describes all the other 20 different things that they have done in the last 20 years and asked the question, what is Amazon up to?

BRIAN KENNY: Amazon and Jeff Bezos are sort of synonymous. He’s a cult of personality there, kind of like Steve Jobs was with Apple. Jeff’s been in the news a lot lately for other reasons, you know, personal reasons. He is still obviously, probably one of the best known CEOs in the world. What’s he like as a leader?

SUNIL GUPTA: I don’t know him personally. Based on the research that I’ve done, he certainly is very customer obsessed. He’s focused on customer. He always says, “You start with the customer and work backwards.” He still takes evidently calls on the call center. The culture is very entrepreneurial, but also very heart driven. I mean, the idea for example of Amazon Prime evidently didn’t come from Jeff Bezos, it came from a low person in the organization. He’s quick to adapt the ideas if he sees some merit in it. It’s almost a 25-year-old company that still works like a startup.

BRIAN KENNY: Was the original concept for Amazon … I mean, I know he sold books originally. Was it ever really a book company?

SUNIL GUPTA: I think it started more as an online retailer. Book was an easy thing because everybody knows exactly what you’re buying. It’s no concern about the quality. His premise in the online store was a very clear value proposition of three things. One was convenience that you can shop in your pajamas, so we don’t have to fight the traffic of Boston or Los Angeles. The second was infinite variety. I don’t have the constraint of a physical store. Even if I have Walmart, which is a huge store, I can only stock so many things. As a result, you only have the top sellers. In Amazon, I can have the long tail of any product if you will. The third was price. It was cheaper, simply because I don’t have fixed costs of the brick and mortar store. I can reduce the cost structure and therefore I can be cheaper. Those were the three key value propositions. That’s how it started. The idea was, I’ll start with books and then move on to electronics and other things. But then of course, it moved far beyond being an online retailer.

BRIAN KENNY: This gets into some of the ideas in your book. I was really intrigued in the book about the notion of what kind of business are we in? Just that question alone. At face value, it looked like Amazon was a retailer. They went in directions that nobody could have imagined. The case really goes into some of a litany of all the things they tried.

SUNIL GUPTA: Right. Again, the purpose of the case was to illustrate as to how these are all connected. From a distance they look completely disconnected and completely lack of focus. Let’s start with how the concept evolved. The first thing was, as I said was online retailer. Very soon it became a marketplace. Now, what is a marketplace? They basically allow third party sellers also to sell on the Amazon platform, which is distinct from a traditional retailer. Walmart doesn’t allow me to set up shop within Walmart, but Amazon allows me to do that. Now, why would they do that? Simply because it increases the variety that they can sell on the platform. Therefore, consumers are quite happy with the variety of the product they can get on Amazon. Amazon gets commission without having the inventory and the capital cost. Perhaps the most important thing of becoming a platform is it creates what we call the network effects. If there are lots of products, everything I can buy is available on Amazon. More consumers are likely to go there. Because there are more consumers, more sellers are likely to go there. It just feeds in itself. More consumers mean more sellers, more sellers mean more consumers, and it becomes a virtual cycle. That’s why there is only one Amazon. Even if I start an online retail, which is in many ways better than Amazon, nobody’s coming to gupta.com, because buyers and sellers are not there. That became the next phase, change from online retailer to marketplace. Then it went into AWS, and you sort of say, “Well, how can it go into a technology company and compete with IBM and Microsoft?” It was competing with Walmart before.

BRIAN KENNY: That’s the web services division.

SUNIL GUPTA: That’s the web services. In fact, at that point in time, Wall Street was very down on that. They said, “What is Bezos thinking?” The idea again, if you think about it, it was very simple. Amazon was building this technology for its own purpose. And then, they started giving this technology, using this technology for the third party sellers, who were selling on its platform.

BRIAN KENNY: Let me just interrupt for a second. That’s a marked, a marked change in direction. They had always been a consumer platform. Now they’re in a business-to-business play. I bet a lot of consumers don’t even know about Amazon Web Services.

SUNIL GUPTA: Correct. Again, not in a traditional sense saying, “This is my market.” That’s simply saying, “I have this capability. There’s a demand for this capability. Can I do it?” Part of that was opportunistic also. If you remember in 2001, the dot.com bubble crashed. If you’re a B2C company, you hedge your bets and get into B2B business. Part of that may have been luck. That was, again, a change of direction. And then, Amazon started producing hardware, Kindle, and now competing with Apple. You sort of say, why is an online retailer getting into hardware production? If you think a little bit about it, the answer is very easy. Kindle was designed to sell eBooks as people move from buying the hard copy books to downloading the eBooks. The Kindle is the classic razor and blade strategy. I sell razors cheap in order to make money on the blades. I’m not making that much money Kindle, but I’m making money on eBooks, which is very different from Apple’s strategy. Apple actually makes money on devices, but Amazon is not making money on devices, or at least not making huge money on devices. Similarly, it moved into online streaming of the video content and suddenly became a competition on Netflix. You sort of say, “Why is a retailer becoming a competition on Netflix?” Again, if you think a little about it, the answer becomes clear. As you and I moved on to not buying DVDs, but actually streaming the stuff, that’s what Netflix did. They used to send the DVDs to us.

BRIAN KENNY: I remember that. I still have a couple.

SUNIL GUPTA: Amazon is very good in sort of moving with the customer. If the customer moved from buying books to eBooks, I move in that direction. If customers move from buying DVDs to streaming, I move in that direction. Now, can Amazon do it? Of course, they can. They have AWS. Netflix is one of the largest customers.

BRIAN KENNY: Are they leading or following? Are they creating a market? In the beginning it seemed like they created something entirely new. Now, are they anticipating, or are they just sort of reacting to what’s happening?

SUNIL GUPTA: No, it’s a combination of both. In some ways they are actually following the consumer behavior and say consumers are moving to a streaming and move with that. They were not the first ones. Netflix actually started the streaming thing. Then, they sort of come up with it. If you think about it, Amazon became not only distributing third party content on videos, but now they have Amazon Studio. I mean, they are making movies, and the competition now becomes Hollywood instead of Walmart. You sort of say, “What has gone wrong with Jeff Bezos? Why is he making movies?” Movies are pretty expensive business and highly risky. The key to that is to understand the purpose of the movies. The purpose of the movies is to hook the consumers from Amazon Prime. If you remember, Amazon Prime started with 79 dollars per year. The benefit at that time was two-day free shipping. Now, you and I are smart enough to sort of do the math in our heads saying, how many shipments do we expect next year, and is 79 dollars worth it or not? Bezos does not want you to do that math. He basically says, “Oh, by the way, I’ll throw in some free content, some free music, some free unique movies.” Now you can’t do the calculation. Why does he care about Prime? Right now, Amazon has about one hundred million Prime customers globally. Let’s say I get an average 100 dollars per year, that’s 10 billion dollars in my pocket before I open the store.

BRIAN KENNY: Right.

SUNIL GUPTA: The research also shows that Amazon Prime customers buy three to four times more than non-Prime customers. I mean, if you’re a Prime customer, you don’t even price shop.

BRIAN KENNY: Once you’re Prime, you’ve got to justify being a member. You buy everything on Amazon.

SUNIL GUPTA: Exactly. Your purchase increases. You become price sensitive, which is fantastic. In fact Jeff Bezos has gone public and say that every time we win a Golden Globe award for our content, we sell more shoes. The purpose of creating their own content is not to make money on the content. This is another different razor to sell you more shoes. Once you understand that, what looks like disparate business is actually extremely tied together.

BRIAN KENNY: It all comes right back to the core. They haven’t always had good ideas. Have they had some misses along the way too?

SUNIL GUPTA: I think the biggest failure was Fire phone.

BRIAN KENNY: Remind us what that was?

SUNIL GUPTA: Amazon launched their own phone. They were obviously very late in the market. iPhone was already there. Samsung had done very good. You have two major players, if not many others, who are very well established. Consumers love their iPhones. The question of course was, why is Amazon launching the phone? What are the odds of success? Clearly the odds of success were low. The reason to launch it was they didn’t want to be beholden to the iPhone or the Googles of the world. They know that the world is moving towards mobile, in terms of shopping, certainly in emerging markets, everybody’s moving to mobile shopping. If tomorrow Apple or Google sort of restrict the Amazon use, or availability of Amazon, because they’re all competing with each other now. It becomes a challenge. To Amazon’s credit, I mean, it’s true for all innovations. Not all innovations succeed. You’ve got to take a shot. If you think about it, all the technology and thought process that got into Fire phone, was not completely a waste. That went into Echo. Now Alexa is a big hit.

BRIAN KENNY: They’re a market leader in that in that. Let’s talk a little bit about the ideas that underlie his Amazon case. I think it starts with knowing what business you’re in. Your book addresses this. I think I know we’re in the education space here at Harvard Business School. Should we be thinking about other businesses?

SUNIL GUPTA: You’re right. The bigger question that Amazon case raises is: how do you define what business you are in? Most of us tend to define business by the traditional industry boundaries. If I’m a bank, I’m in banking and other banks are my competition. I think industry boundaries are getting blurred today. Amazon can get into banking. I have lots of customers, I can start giving loans to small and medium enterprises.

BRIAN KENNY: They know a lot about those customers.

SUNIL GUPTA: They know a lot about customers. The key asset is now customers and data, and not the product and services that you offer. Once you know about customers, you can do lots of different things. One thing is, I would say is the industry boundaries are getting blurred. You need to think about not competition, but what do customers want. Do I have capabilities to serve that? The second thing is the traditional definition of where competitive advantage comes from is changing. What I learned, in doing my MBA class many years ago, we used to read Michael Porter’s competitive strategy stuff. If I were to simplify and summarize what I learned in competitive strategy was competitive advantage comes from making your product better or cheaper. Differentiation or cost leadership, which makes sense. If you think about it, it’s very much product-focused. I think in today’s world, competitive advantage comes from connecting products and connecting customers. The Kindle and eBooks is an example of connecting products, multiple products right? Making movies of Amazon and selling more shoes is connecting products. Razor and blade have been around forever. I think what is different today is razor and blade could be in completely different industries. Movies and shoes. The other side is connecting customers. We are in a network economy. That’s why there is only one Facebook, or one WhatsApp. If you are the only person on Facebook, what’s the value of Facebook? Not much, unless you love yourself. As more and more people get onto Facebook, the value of Facebook increases. It’s not about improving product. Without changing product, Facebook value increases. I think in this connected world that we live in, it’s about connecting products and connecting consumers.

BRIAN KENNY: We’ve got a lot of listeners out there. Many of whom are probably leading firms of one kind or another. How do they even go about exploring redefining their business?

SUNIL GUPTA: I think again, you need to think about what is your key asset? Everything starts with the consumer. In the Amazon case, you move with the consumer to some extent. I asked the same of a company for a medical device manufacturer. I said, “Who’s your competition?” The typical answer is: the other medical devices. Medical business is now becoming a lot about data. Google is getting into that. Apple. iPhone is becoming a medical device. Suddenly you have a very different kind of player getting into this thing. When I say, “What business are you in?” You need to think about who might actually get into that business and that changes the whole picture.

BRIAN KENNY: Why is Amazon so good at engaging customers?

SUNIL GUPTA: I think it comes from the culture of being customer obsessed, that no matter what the customer is right. They deliver on that promise. I mean, the level of convenience that customers expect from companies has changed. It used to be, if a company delivers a product within a week, that was considered good. Now, if you don’t deliver on the same day it just seems awful. They’ve raised the bar in everything. Of course, they’re using technology very effectively, whether it’s in their warehousing, whether now they’re investing in drones. I think they’re still a 25-year-old startup.

BRIAN KENNY: That’s another point that I wanted to touch upon. They’re able to adapt their supply chain it seems almost effortlessly to whatever business direction they move in. Is it possible for another entry to come into this space and scale in the same way that Amazon has? Is this a once-in-a-lifetime type thing?

SUNIL GUPTA: That’s a tough question. I think Amazon, it’s not that they’re adapting supply chain for everything, right? For example, I don’t think Amazon supply chain is ready for delivering frozen food yet. If I have a supply chain to ship you electronics, I can use the same supply chain to ship you prescription medication. That opens up another billion dollar, several billion dollar market. If I call myself an online retailer, I will never think of prescription drug delivery. If I think of my capabilities, I have the warehouse to deliver electronics and books. Why can’t I deliver your prescription medication? That opens up completely different businesses.

BRIAN KENNY: What are the kind of pitfalls that you need to be careful of, as you start to move into adjacent markets?

SUNIL GUPTA: I think definitely the big challenge is: how far do you go? On one hand it’s good to expand the business scope because the industry boundaries are getting blurred. The danger is do you lose focus? The classic challenge of losing focus. There’s a balance. I think in Amazon’s case, if you notice, everything is very tightly connected. If you remove one part, the whole becomes less. That’s the key question: are the pieces fitting together nicely, or they just happen to be another business because it’s profitable?

BRIAN KENNY: We’ve done a couple of cases on Cold Call that touch on the organizational impact of firms that move into new businesses. Some of them are examples of where it’s benefitted the employees. In other cases, it seems to have disrupted the culture in negative ways. How do you see this playing out at Amazon? Does it impact them in any way?

SUNIL GUPTA: If you look at Amazon, it has grown the top line 20, 25% every quarter without fail, except for one quarter in 2001. Right now, it’s in 2019, their sales are 232 billion. I don’t know that many companies, which grow at that rate, even when they’re over 200 billion. I think, if you’re on a winning team, that as an employee, it has to energize you. If you are in a culture which encourages experimentation and innovation, it has to excite you. At the same time, I’m sure it’s a very demanding culture, and there have been reports about how demanding the culture of Amazon is. It probably is not for everybody. For the people who are innovative, who are entrepreneurial, who want to be on a winning team, I’m sure it’s an exciting place.

BRIAN KENNY: There are sort of shades of Apple there. I mean, I think Apple had the same reputation. You’ve discussed this case in class with students.

SUNIL GUPTA: Oh, many students.

BRIAN KENNY: What are sort of the top line things that surprise you as you discuss it?

SUNIL GUPTA: The nice thing about this case is, everybody knows Amazon as a consumer. Everybody has shopped at Amazon. It’s very easy case. In fact, it’s a very short case that I give, at the opening of most sessions. People see it as very surface level. They sort of don’t realize the deep insights that comes out. As a three page case, you sort of say, I will be done in ten minutes, but then you peel the layers of the onion. That was a shocking thing to them, as to how you peel the layers of the onion and how you see the connection across different things. Why did Amazon buy Whole Foods? It makes no sense. Why did they get into AWS? It makes no sense. When you start un-peeling that layer, you see the connection as to why Amazon is doing all these different things. I think that’s the “A-ha” moment that comes across.

BRIAN KENNY: Much more on that in your book. How’s the book doing?

SUNIL GUPTA: Book is doing great.

BRIAN KENNY: Great.

SUNIL GUPTA: Fabulous. It was released in August. I’ve been going around on tour for many, different parts of the world.

BRIAN KENNY: I bet you can buy it on Amazon.

SUNIL GUPTA: You can certainly buy it on Amazon.

BRIAN KENNY: That’s great. Sunil, thanks for joining us today.

SUNIL GUPTA: Thank you very much Brian.

HANNAH BATES: That was Harvard Business School professor Sunil Gupta – in conversation with Brian Kenny on Cold Call . If you liked this episode and want to hear more of Harvard Business School’s legendary case studies in podcast form – search for Cold Call wherever you get your podcasts. We’ll be back next Wednesday with another hand-picked conversation about business strategy from the Harvard Business Review. If you found this episode helpful, share it with your friends and colleagues, and follow our show on Apple Podcasts, Spotify, or wherever you get your podcasts. While you’re there, be sure to leave us a review. We’re a production of the Harvard Business Review – if you want more articles, case studies, books, and videos like this, be sure to subscribe to HBR at HBR.org. This episode was produced by Anne Saini, Ian Fox, and me, Hannah Bates. Special thanks to Maureen Hoch, Adi Ignatius, Karen Player, Ramsey Khabbaz, Nicole Smith, Anne Bartholomew, and you – our listener. See you next week.

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Table of Contents

The 4ps of amazon's marketing strategy, amazon marketing channel types, amazon's digital marketing strategy, become a digital marketer in 2022, amazon marketing strategy 2024: a case study.

Amazon is the largest online store in the world based on sales and market value. This online business has changed how people all over the world do business. Jeff Bezos started the company in Washington, USA on July 05, 1994. He was the CEO of the company till July 2021. Andy Jassy took over as the President and CEO of Amazon on July 05 2021. 

The first success for Amazon came along very quickly. It began as an online bookstore and kept adding to what it could do. In 1997, the company went public and is now on the NASDAQ in the US. Without help from the press, the company could sell books in 45 countries in less than two months. Amazon is now in more than 200 countries, and its website sells almost everything. Its subsidiaries include Audible, Twitch, IMDb, and Amazon Web Services.

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Amazon looks at the " marketing mix " of a company or brand, which comprises the 4Ps - 

Here is a comprehensive explanation of each factor's function.

Amazon used only to sell books online, but now it sells millions of different products in many categories. Shoes, jewelry, clothes, toys, home and kitchen appliances, electronics, books, the great outdoors, sports, car accessories, and works of art are some of the most popular products. Amazon sells goods from small businesses and shops but promotes its brand , Amazon Basics.

A company can price its products in several different ways. Here are some to remember: 

• Cost-plus pricing 
• Value pricing 
• Competitor pricing 
• Price discrimination

Amazon often uses a pricing strategy called "competitive pricing," in which it looks at the prices of its competitors and bases its prices on those. It helps keep costs low and gives customers a lot of choices.

Amazon also uses the following methods to set prices:

• Promotional pricing
• Behavioral pricing

Amazon can change its products daily because of how it runs its business. This is its best feature, making it hard for other companies to compete with Amazon.

Amazon's online store has grown over the past few years in many parts of the world. Millions of products are now more accessible to customers worldwide to get. Even if you live in a remote part of the world, you can get packages quickly from Amazon. Part of the company's success comes from the fact that it ships fast and has fulfillment hubs.

4. Promotion

When it comes to marketing, Amazon knows how important communication is. It uses a lot of different kinds of advertising to reach people who might buy or use its products. Amazon has a lot of sales and discounts, which is a great way to build its brand. It has regular ads on websites, newspapers, TV, billboards, and social media , among other places. There are also affiliate sites that work with Amazon.

Also Read - What are the 7 Ps of Marketing? Read this article and find out! 

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PPC advertising on Amazon can be put into three groups:

1. Headline Search Ads

If you want to get your brand out there, it's best to use headline search ads. Amazon now has two ways to promote brands, especially during the holiday season:

• Headline Search Ads
• Amazon Stores

Title and Amazon Stores Together, Search Ads can help people know more about your brand and the products you sell. It also builds trust with customers and makes sure that your products are shown in the right way.

By combining Headline Search Ads, Amazon Stores, and Sponsored Products into a single Pay-Per-Click (PPC) marketing campaign, you can easily reach many shoppers in less time.

2. Product Display Ads

Another type of effective PPC ad is a "Product Display Ad," which is placed next to the product or in the "similar items" section on the product page. This kind of ad is only meant to be self-service. It is linked to the ASINs of the products, which gives sellers many options for focusing on different types of customers based on how they act.

3. Sponsored Product Ads

One of the best ways to get more people to see and buy your product is to pay for an advertisement. Sponsored product ads appear on the top when you search for something on Amazon.

Amazon's digital marketing strategy is comprehensive, and they reach the customers through digital marketing. Today, everyone uses social media. Amazon advertises its products on social media, taking advantage of those who use those sites and sending them to their product pages to help them sell more. It has teamed up with several big and small influencers in the country to reach its audience more effectively. It uses Twitter, Instagram, YouTube, Pinterest, and Facebook.

Amazon on Facebook

There are 10 million people who follow Amazon India on Facebook . It primarily uses Facebook to share company news and advertising. It uses strong advertising to get the word out about its Sale Days. It also stays up-to-date by publishing posts on different topics.

Amazon on Instagram

Interviews with artists from different backgrounds and key advertising are the main parts of Amazon's Instagram marketing plan. It has more than 2.8 million Instagram followers. The company's strategies for Instagram and Facebook are very similar, except that it doesn't post updates about company news on either platform. Both platforms have posts from the company that are very similar. 

Amazon on Twitter

Amazon India has a different plan for getting new customers through Twitter. It stays in touch with its followers, using a wide range of content, holding contests to get new customers, and following and creating trends. It is one of the biggest in its field, with two million Twitter followers. Twitter content makes it sound less like advertising and more like personal recommendations. 

Amazon on YouTube

The best thing about Amazon's YouTube ads is that they immediately grab people's attention. Amazon makes sure that its ads are always interesting and valuable. Most of the time, it does this by trying to make the customer feel special. 

Amazon on Pinterest

More than a million people follow Amazon on Pinterest. They use Pinterest to promote their products based on a wide range of themes to grab people's attention.

The way Amazon uses digital marketing is unparalleled. To stay competitive, they should keep making more exciting content and putting it out in the best way possible. Amazon Marketing Strategy gets updated periodically to stay ahead of the curve. Competing in the retail industry is complex, and Amazon's marketing strategy has helped the company stay ahead of the competition.

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The Integration of Digital Business Models: The Amazon Case Study

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• Carlo Bagnoli 10 ,
• Andrea Albarelli 11 ,
• Stefano Biazzo   ORCID: orcid.org/0000-0003-3373-2964 12 ,
• Gianluca Biotto 13 ,
• Giuseppe Roberto Marseglia 14 ,
• Maurizio Massaro   ORCID: orcid.org/0000-0001-6461-2709 15 ,
• Matilde Messina 13 ,
• Antonella Muraro 16 &
• Luca Troiano 17  

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The final chapter involves the description of the Amazon case study. The intention is to reconnect the various categorizations illustrated in the previous chapter to a real-world example for the purpose of presenting a successful case of business disruption as Amazon is known to have disrupted retail. The analysis aims at highlighting the fact that Amazon combines all the business model frameworks described in the preceding chapters as well as investigating their coexistence within a single organization.

The present chapter also explains a few methodologies which have been developed in order to guide companies through the process of disrupting their existing business models and facilitating the shift towards an innovative framework. Digital technologies can ease the above-mentioned transition as firms are required to select the technological advancements enabling them to accomplish particular organizational goals.

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Department of Management, Ca’ Foscari University of Venice, Venice, Italy

Carlo Bagnoli

Department of Environmental Sciences, Informatics and Statistics, Ca’ Foscari University of Venice, Mestre, Venice, Italy

Andrea Albarelli

Department of Management and Engineering, University of Padua, Padua, Italy

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Strategy Innovation S.r.l., Venice, Italy

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University of Pavia, Pavia, Italy

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Bagnoli, C. et al. (2022). The Integration of Digital Business Models: The Amazon Case Study. In: Digital Business Models for Industry 4.0. Future of Business and Finance. Springer, Cham. https://doi.org/10.1007/978-3-030-97284-4_4

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Amazon Business Case Study [2024]: In-depth Analysis

How does an online book retailer become a behemoth dominating the global e-commerce industry? The 28-year-old history of Amazon’s growth is a masterclass in building a successful business strategy that has revolutionised the retail experience forever! The company has achieved eponymous status with a global presence and diversified business. No wonder its sales are expected to reach an astounding USD 746.22 billion with a valuation of USD 2 trillion in 2024! From being an online bookseller headquartered in a garage to becoming the second most valuable brand in the world , the saga of this global brand is a case study in all the leading business schools.  

So what is the secret behind the explosive success of Amazon? This article provides a comprehensive case study of Amazon and its winning business strategy. 

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Glimpsing Back: A Brief History of Amazon

With a small team, the budding company made headway in the book-selling market by offering a wide virtual selection of books compared to brick-and-mortar stores with doorstep delivery. With a user-friendly interface, easy-to-search engine, and focus on creating a ‘virtual community,’ the business grew by leaps and bounds. The emphasis on customer choice, experience, and convenience serves the company well even today. 

The name was aspirational with a nod to the largest river in the world- Bezos’ Amazon sought to be the largest e-commerce bookseller in the world. By July 1995, Amazon was marketing itself as the “Earth’s Biggest Bookstore,” selling over one million titles to all 50 states in the US and across 45 countries . It provided stiff competition to brick-and-mortar giants like Barnes and Noble and Borders. 

The company went public with its IPO in 1997 ; since then, there has been no looking back. Since its listing, the company has significantly diversified its offering by including music, electronics, toys, kitchen utensils, clothes, and more on its e-commerce site. From the Earth’s Biggest Bookstore, Amazon shifted its tagline to “Books, Music and More.” The company expanded to Germany and the United Kingdom by purchasing online bookstores, thus increasing its revenue. At its core, the company established a dynamic, efficient, and successful distribution and logistical model that helped capture a global market.

The year 1999 marked two critical moments for Amazon. First, the company patents the “1-Click” technology allowing users to purchase a product with one click. Second, it launches the 3rd party seller marketplace to allow third-party sellers to sell their produce through Amazon. These measures exponentially increased the sales on the platform. The company’s success put Bezos on the map as he received the prestigious accolade of the “Time’s Person of the Year” in 1999 at 35 years of age. 

The company survived the dot-com bubble burst and got only stronger. In 2003, the company took a momentous step by launching Amazon Web Services , a web-hosting business, that marked its arrival into the tech business. It provides cloud computing services to individual developers, companies, and governments through the platform’s IT infrastructure. The strategic shift from an e-commerce platform to a tech company was instrumental in Amazon’s diversification strategy and revenue generation. 

The company took further measures to develop brand loyalty through its Amazon Prime program in 2005. Prime membership has since expanded its services significantly and is one of the most valuable assets for the company today. It reshaped consumer expectations and experiences of shopping across the world. 

Amazon has been on a path of extensive acquisition and alliance . From the online shoe retailer Zappos to the robotics company Kiva Systems and the grocery delivery service Whole Foods- each acquisition captured pre-existing markets and distribution networks of the acquired assets. With every move, the company strategically entered new markets, removed competitive businesses by acquiring them, made distribution and logistics more efficient, and improved consumer experience. These moves catapulted the company to a 1 trillion dollar valuation in 2018. The company’s profits surged during the pandemic as Bezos’ hourly wealth increased by USD 11.7 million . The following year, Bezos stepped down as the CEO and found his replacement in Andy Jassy, the CEO of Amazon Web Services.

Now that we know the history of Amazon, its business strategy becomes easier to decipher. Before we unravel its key business strategies, let’s look at its many businesses. 

Amazon and its Diversified Business Model

A case study of Amazon is incomplete without an understanding of the many businesses that it has a foot in. Here are the diverse businesses that help Amazon generate revenues from multiple streams and have made it a leader in the global market. 

Online retail store

Amazon began as an online seller of books, and it continues its operations as an e-commerce site. Today the site offers a variety of products for the best prices to the consumer’s doorsteps. With an easy-to-use interface, easy return policy, “1-Click” buying, customer reviews, and suggestions, the e-commerce site knits an unrivalled retail experience. 

Amazon Marketplace

Amazon opened its platform to third-party sellers who could leverage its large customer base to sell products. It brings a diversity of products to the retailer without holding inventory. Amazon would, in turn, charge the sellers a percentage of their revenue as a commission fee. It is estimated that third-party sellers generate a gross merchandise value (GMV) of USD 300 billion for the platform.

Amazon Web Services (AWS)

Amazon’s cloud platform offers individual developers, start-ups, established businesses, and governments a range of cloud computing services through its IT infrastructure. It is the fastest-growing business segment for the brand clocking a global net revenue of USD 80.1 billion in 2022. 

Amazon Prime

Amazon’s member subscription service offers numerous membership benefits ranging from access to digital video and music streaming, audiobook and ebook platforms, free delivery, exclusive deals, Prime Day access, and much more. The company’s global net revenue from its subscription services stood at USD 35.22 billion in 2022. 

Amazon revealed in 2022 that the advertising wing of the company had generated a revenue of USD 31.2 billion the preceding year. The company offers custom advertising solutions to customers and campaign placements across multiple channels like Fire TV placements, Amazon physical stores, the brand’s homepage, and customised destination pages.

Physical stores

Amazon made an entry into the brick-and-mortar business with the establishment of a physical bookstore in Seattle in 2015. The company has since expanded its physical presence with Amazon Go, Amazon Fresh, Amazon Go Grocery, Whole Foods Market, and Amazon Style. It has sought to transform the real-world shopping experience with its “Just Walk Out Shopping’ experience. 

Breaking Down Amazon’s Business Strategy

Amazon’s business strategy has been innovative and forward-thinking from the get-go. Its path-breaking business model has inspired many but retains its uniqueness in execution. At its core, the company has maintained its customer-centric ethos, where its customers comprise three sets: retail customers, seller customers, and developer customers.   

For a comprehensive case study of Amazon , let’s take a closer look at the secret recipe behind its success.

Customer Obsession

The company proudly proclaims that it aims to be the “Earth’s most customer-centric company.” Since its inception, Amazon has won over the trust and loyalty of its customers by perfecting its marketing mix by offering “a comprehensive selection of products, low prices, fast and free delivery, easy-to-use functionality, and timely customer service.”   As Amazon’s customer base and usage expands exponentially, the company has worked towards optimising user experience through continuous assessment and feedback mechanisms.

Diversification

Amazon has kept up with the emerging demands of the market with growth potential in the long term. Its future-oriented vision has helped the company grow by leaps and bounds by venturing into new businesses that have added to its revenue streams. From cloud computing services to OTT services and subscription-based benefits, Amazon has reinvented what a diversified business looks like. 

Expansion through partnerships and acquisitions

Amazon has continually acquired and partnered with businesses to expand its customer base, enter new markets, diversify its product offerings, eliminate competition, and gain distribution and logistical networks. From IMDB and The Washington Post to Twitch and Pillpack, Amazon has bought companies across multiple categories to gain a foothold in their markets and operations. It has helped the company scale up its functions rapidly across the globe.

Technologically-driven innovations

Initially, Amazon was written off as it was started by “computer guys” who knew nothing about selling books. However, it was a focus on innovative technology that the company grew into a tech giant dominating the e-commerce space. Whether it is the 1-Click technology, SEO, user interface, cloud computing services, Just Walk Out technology, or its e-devices, the company has optimised customer experience by leveraging technology.

Data-based metrics

Amazon has consistently relied on metrics to assess, strategise, and grow its business. Data is an invaluable currency left behind with every click by the customer. The company has effectively and efficiently amassed these data into actionable insights to improve user experience, build and improve products and services, and develop successful marketing strategies. 

Marketing strategy

A comprehensive marketing strategy has been central to Amazon’s brand-building exercise. With the right marketing mix, the brand has become a household name. Its name and logo are recognisable anywhere in the world. A continual push to diversify its portfolio, competitive pricing policy, expanding its operations, and consistent promotions through multiple channels have been integral to achieving this global status. 

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Amazon, the second-most valuable company in the world, has been almost three decades in the making. Every step and misstep has been strategic and guided by the principles of: “customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking.” This case study of Amazon has sought to highlight its history, business model, and business strategies that have gone into the making of the behemoth. Ultimately, the company is a product of the management of Jeff Bezos and Amazon’s leadership. 

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Frequently Asked Questions (FAQs)

Jeff Bezos has held the position of Founder and CEO of the company. However, he inherited the position of the Executive Chairman of Amazon after resigning as the CEO of the company in 2021.

Amazon launched in India in June 2013. Initially starting its operations to serve Indians with books, films, TV shows and subscription-based services, the company further expanded its wings to become one of the leading shopping destinations for Indians.

The most important focal point of Amazon’s business strategy is its customers (retail customers, sellers, and developers) and building a customer-centric company.

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A Comprehensive Case Study on Amazon's Marketing Strategy

In today's digital age, Amazon has emerged as the market leader in e-commerce. Its success can largely be attributed to its innovative and effective marketing strategies . This comprehensive case study delves into the various aspects of Amazon's marketing strategy and explores the key factors that have contributed to its unparalleled growth and success.

Understanding Amazon's Marketing Strategy

The core principles of amazon's marketing.

At the heart of Amazon's marketing strategy lies a strong focus on customer satisfaction . The company's relentless pursuit of customer centricity has played a crucial role in its success. By consistently prioritizing the needs and preferences of its customers, Amazon has created a loyal customer base that keeps coming back for more.

Amazon's commitment to customer satisfaction goes beyond just providing quality products. The company understands that a positive customer experience begins with a user-friendly website interface . With a clean and intuitive design, Amazon ensures that customers can easily navigate through the vast selection of products and find exactly what they are looking for.

Furthermore, Amazon employs a data-driven approach to marketing . The company leverages advanced analytics and algorithms to understand customer behavior, identify trends, and personalize the buyer experience. This allows Amazon to target its marketing efforts with precision, ensuring maximum return on investment.

Through its data-driven approach, Amazon is able to gain valuable insights into customer preferences and shopping habits. By analyzing vast amounts of data, Amazon can identify patterns and trends, enabling the company to make informed decisions about product offerings and marketing strategies .

Related: Unveiling Home Depot's Winning Marketing Strategy

The Role of Customer Centricity in Amazon's Strategy

Amazon's customer-centric approach is evident in every aspect of its marketing strategy . From its user-friendly website interface to its hassle-free return policy, the company constantly strives to deliver exceptional customer experiences. By continuously adapting and improving its services based on customer feedback, Amazon has built a reputation for reliability and trustworthiness.

One of the ways Amazon demonstrates its commitment to customer centricity is through its hassle-free return policy. The company understands that customers may occasionally need to return or exchange a product, and Amazon makes the process as seamless as possible. This not only enhances the overall customer experience but also instills confidence in customers, knowing that their satisfaction is a top priority.

Additionally, Amazon utilizes customer data to create personalized product recommendations and targeted marketing campaigns. By understanding individual customer preferences and purchase history, Amazon can effectively cross-sell and upsell products, increasing customer satisfaction and revenue. This marketing strategy creates repeat customers and expand's the brand's reach for its own products and its sellers.

Amazon's personalized product recommendations are powered by sophisticated algorithms that analyze a customer's browsing and purchase history. By leveraging this data, Amazon is able to suggest products that are highly relevant to each customer's unique interests and preferences. This not only enhances the shopping experience, but also increases the likelihood of customers discovering new products they may not have otherwise considered.

Amazon also makes personalized marketing available to sellers through its advertising platform. Amazon sellers can create ads for their products that will be shown to people who search for products in the same category, or who buy similar products.

Amazon's marketing strategy revolves around customer satisfaction and data-driven decision making. By prioritizing the needs and preferences of its customers, and leveraging advanced analytics, Amazon has been able to build a loyal customer base and deliver exceptional shopping experiences. Through its customer-centric approach, Amazon continues to innovate and adapt, ensuring that it remains a leader in the e-commerce industry.

Related: Liquid Death Marketing Strategy Case Study: Slaying the Beverage Industry with Killer Branding and Marketing

Dissecting Amazon's SEO Strategy

When it comes to search engine optimization (SEO), Amazon is a master of the game. The company understands the importance of optimizing product listings with relevant keywords to ensure maximum visibility and sales. Its massive infrastructure of product landing pages, product categories, and interlinking between pages make for the perfect SEO play. But what exactly does Amazon do to achieve this?

Importance of Keywords in Amazon's SEO

Amazon's SEO strategy revolves around thorough keyword research . The company invests significant time and resources into identifying the most popular search terms used by customers. By incorporating these keywords strategically within product titles, descriptions, and backend fields, Amazon ensures that its products appear higher in search results. It also encourages sellers to leverage keyword strategies in their own product listings and advertising campaigns on the platform.

However, keyword optimization is just the tip of the iceberg. Amazon recognizes that positive reviews and ratings are equally important in boosting a product's search ranking and instilling trust in potential buyers. To encourage customer feedback, Amazon actively solicits reviews and provides a platform for customers to share their opinions.

By combining keyword optimization with a strong focus on customer reviews, Amazon creates a powerful SEO strategy that maximizes product visibility and drives sales.

Related: Exploring Five Guys' Marketing Strategy

How Amazon Optimizes Product Listings

Amazon goes above and beyond to optimize product listings and enhance their visibility. One of the key elements is the inclusion of high-quality product images. These images capture customer interest and provide a visual representation of the product. Additionally, informative descriptions play a crucial role in educating customers about the product's features and benefits.

But Amazon doesn't stop there. The company offers product videos and enhanced content features to provide customers with a comprehensive understanding of the product. These additional resources allow customers to make informed purchasing decisions and further increase the chances of a sale.

Moreover, Amazon leverages its vast customer review data to enrich product listings. By identifying and displaying relevant product information, such as frequently asked questions, customer-generated images, and comparisons with similar products, Amazon creates a dynamic and engaging shopping experience. This user-generated content aids in customer decision-making and adds a layer of authenticity to the product listings.

By combining keyword optimization, high-quality visuals, informative descriptions, and user-generated content, Amazon creates a compelling SEO strategy that not only boosts visibility but also enhances the overall shopping experience for customers.

Related: Dyson Marketing Strategy: A Look at Home Appliance Go-to-Market Strategy and Branding

Amazon's Advertising Tactics

Amazon, the e-commerce giant, employs various advertising strategies to help sellers promote their products and increase their visibility within the marketplace. One of the key tactics utilized by Amazon is its pay-per-click (PPC) advertising model.

Amazon's Pay-Per-Click Advertising

Through its advertising platform, Amazon offers sellers the opportunity to bid on relevant keywords, ensuring that their products appear prominently in search results and sponsored product listings. This targeted approach allows sellers to reach potential customers precisely when they are actively searching for similar products.

What sets Amazon's PPC advertising apart is its real-time performance tracking. Sellers can monitor the effectiveness of their campaigns and make data-driven decisions to optimize their advertising spend and adjust bidding strategies accordingly. This level of control ensures that sellers maximize their return on investment and achieve their desired outcomes.

Furthermore, Amazon provides sellers with valuable insights and analytics, allowing them to understand customer behavior, preferences, and trends. Armed with this information, sellers can refine their advertising strategies and tailor their offerings to meet the needs and expectations of their target audience.

Related: The Effective Lego Marketing Strategy: Building Success Brick by Brick

Sponsored Products and Brands on Amazon

In addition to its PPC advertising model, Amazon offers a comprehensive sponsored products and brands program. This program enables sellers to promote their products and gain increased visibility within Amazon's vast marketplace.

Sponsored products appear alongside organic search results, capturing the attention of potential customers and driving traffic to the seller's product page. By featuring their products in these prominent positions, sellers can significantly increase their chances of attracting interested buyers and generating sales.

Similarly, the sponsored brands feature allows sellers to showcase their brand logo, custom headline, and a selection of products in a highly visible ad placement. This brand-focused advertising not only helps sellers drive traffic to their product listings but also aids in building brand awareness and recognition among Amazon shoppers.

By strategically utilizing sponsored products and brands, sellers can effectively differentiate themselves from competitors and establish a strong presence on Amazon. With the ability to target specific keywords and display their products prominently, sellers can increase their visibility, attract more customers, and ultimately drive sales.

Amazon's advertising tactics, including its pay-per-click advertising model and sponsored products and brands program, provide sellers with powerful tools to promote their products and reach their target audience. With real-time performance tracking, data-driven decision-making, and the ability to showcase their brand, sellers can maximize their advertising efforts and achieve success on Amazon's platform.

Related: The Effective Marketing Strategy of IKEA

Amazon's Social Media Presence

The impact of social media on amazon's growth.

While Amazon's success primarily stems from its e-commerce platform, its social media presence has also played a significant role in its growth. Through various social media channels, Amazon engages with its customers and fosters a community of brand advocates. This direct and interactive approach strengthens customer relationships and builds brand loyalty.

One way Amazon utilizes social media to connect with its customers is by actively responding to their comments and inquiries. Whether it's addressing a customer concern or simply thanking them for their support, Amazon's social media team ensures that every interaction is meaningful and personalized. This level of engagement not only makes customers feel valued but also creates a sense of trust and reliability.

Moreover, social media provides Amazon with a platform to promote its products, offer exclusive deals, and share informative content. By leveraging the power of social media influencers and user-generated content, Amazon expands its reach and generates buzz around its offerings.

For instance, Amazon collaborates with popular influencers in various niches to showcase their products and services. These influencers, who have a large and dedicated following, help create brand awareness and drive traffic to Amazon's website. Additionally, Amazon encourages customers to share their experiences and opinions through user-generated content, such as reviews and testimonials. This not only provides valuable insights for potential customers but also acts as a form of social proof, further enhancing Amazon's credibility and reputation.

Related: Lululemon Marketing Strategy - A Closer Look

Amazon's Approach to Social Media Marketing

Amazon understands the importance of tailoring its social media marketing strategy to suit different platforms and target demographics. Whether it's creating visually appealing content for Instagram or utilizing Facebook's powerful ad targeting capabilities, Amazon deploys a multi-pronged approach to maximize its social media presence.

On Instagram, Amazon showcases its products through stunning visuals and creative storytelling. The platform's emphasis on aesthetics allows Amazon to highlight the unique features and benefits of its offerings, captivating users' attention and driving engagement. Additionally, Amazon utilizes Instagram's shopping features, enabling users to seamlessly purchase products directly from the app.

Furthermore, Amazon actively encourages user-generated content by incentivizing customers to share their experiences and opinions on social media. Through contests, giveaways, and customer spotlight features, Amazon taps into the power of word-of-mouth marketing and harnesses the influence of its satisfied customer base.

Amazon also recognizes the potential of video content in capturing users' attention and conveying its brand message effectively. The company leverages platforms like YouTube and TikTok to create engaging and informative videos that showcase its products in action. These videos not only entertain and educate viewers but also drive traffic to Amazon's website, ultimately leading to increased sales.

In addition to organic content, Amazon also invests in paid social media advertising to reach a wider audience. By utilizing Facebook's powerful ad targeting capabilities, Amazon can tailor its advertisements to specific demographics, interests, and behaviors. This targeted approach ensures that Amazon's ads are shown to the most relevant audience, maximizing the return on investment and driving conversions.

Related: Uniqlo's Winning Marketing Strategy

The Power of Amazon Prime in Marketing

How amazon prime enhances customer loyalty.

Amazon Prime, Amazon's subscription-based membership program , has revolutionized customer loyalty in the e-commerce industry. By offering free and expedited shipping, exclusive access to deals, and a host of digital benefits such as Prime Video and Prime Music, Amazon has created an unparalleled value proposition for its customers.

With millions of Prime subscribers worldwide, Amazon enjoys a significant competitive advantage. The perks and convenience of Prime membership incentivize customers to consolidate their purchases on Amazon, further solidifying the company's market dominance.

The Role of Prime in Amazon's Sales Strategy

Amazon strategically leverages the power of Prime to drive sales and promote customer engagement. For instance, the Amazon Prime Day, an annual sales event exclusively for Prime members, generates tremendous buzz and boosts sales across various product categories.

Additionally, Prime's vast customer base provides Amazon with valuable data and insights, enabling the company to personalize its marketing strategy and offer targeted promotions. By understanding individual customer preferences and purchase patterns, Amazon can deliver highly relevant recommendations, driving repeat purchases and fostering long-term customer loyalty.

Final Thoughts on Amazon's Marketing Strategy

As this case study demonstrates, Amazon's marketing strategy is a carefully orchestrated combination of customer centricity, SEO tactics, advertising prowess, and social media mastery.

By staying true to its core principles, adapting to changing market dynamics, and embracing innovation, Amazon continues to dominate the e-commerce landscape, setting new benchmarks for success.

About the Author

Hi, I'm Justin and I write Brand Credential. I started Brand Credential as a resource to help share expertise from my 10-year brand building journey. ‍ I currently serve as the VP of Marketing for a tech company where I oversee all go-to-market functions. Throughout my career I've helped companies scale revenue to millions of dollars, helped executives build personal brands, and created hundreds of pieces of content since starting to write online in 2012.

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Amazon. No, we’re not talking about the South American rainforest. But when it comes to sheer size, we might as well be. Amazon is an ecommerce goliath – a household name where you can buy almost anything you might want or need, and have it delivered the next day. So what’s been the secret behind its massive success?

Amazon’s world class Customer Relationship Management (CRM) strategy, of course.

Amazon is growing every year. In Q4 2022 alone, it reported a colossal $149.204 billion in revenue – a 9% increase from the same period in 2021. According to Bloomberg, Amazon’s founder Jeff Bezos’ net worth is currently $143 billion and he’s well on track to become a trillionaire by 2026  – although the company itself surpassed that particular milestone when it reached a market value of $1.32 trillion in June 2020. So just how did Amazon’s CRM take it from its humble roots as a garage-based online bookseller to unfettered digital dominance?

Developing its CRM strategy has helped Amazon retain customers, and tailor its service around the individual . And crucially, it’s helped it sell to its millions of loyal customers not once, but again and again, while fighting off swarms of competitors.

Salesforce is our top pick for email marketing and contact management. Learn more by visiting Salesforce’s website.

The Amazon story

1994: Jeff Bezos founds company as an online bookseller

1997: Reaches one million customer accounts

1998: Expands into selling CDs and DVDs

2001: Makes first profit in final quarter of year

2005: Launches Amazon Prime

2007: Launches the Kindle e-reader

2017: Acquires supermarket chain Whole Foods Market

2020: In February, Amazon becomes just the fourth tech company in the world to reach a valuation of $1 trillion

2021: Purchases 11 aircraft from Delta Air Lines and WestJet Airlines to join ‘Amazon Air’ – the ecommerce titan’s burgeoning entry into the cargo network space.

2022: Receives awards in the Best Product and Design Team and Best Places to Work in Seattle categories at the Comparably Awards.

2023: Ends its charity donation program in February as a cost-cutting measure.

Bezos initially wanted to call Amazon ‘Cadabra,’ but it was abandoned for sounding too much like ‘cadaver.’ Fair enough… it was a pretty dead idea, anyway!

Amazon’s CRM strategy: the secret to success

“We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better.”

–  Jeff Bezos , founder and CEO of Amazon

A strong emphasis on the customer is the foundation of Amazon’s success – and it’s the company’s intelligent use of CRM that has enabled this. But it doesn’t use your typical CRM software such as Zoho or HubSpot. Developed in-house, Amazon’s CRM software captures customer data at the point of purchase, which it uses to instantly customise its users’ online experience and get a full view of the customer journey. It learns about customer habits, improves relationships from the first purchase, and reduces returns or even cart abandonment based on the customer’s ecommerce activities.

A conventional CRM will be able to get the job done well for the vast majority of businesses,  but Amazon has the resources to create and maintain its own CRM, which has specific features designed to work seamlessly with the Amazon platform. With its custom-built CRM, Amazon can be 101% sure that operations will run smoothly, workflow can be improved from top to bottom, and customers will be taken care of.

So why do customers keep coming back? Well, Amazon’s interface is simple and easy to use. You can view your own order history and how much you’ve been spending, and returns are handled swiftly through the system. Re-ordering is a breeze, and you can track your purchase through every stage of the delivery process.

All of this is down to how Amazon has managed to overcome common CRM problems, as well as the ecommerce giant’s intuitive use of CRM software. Let’s take a look at how it works.

Are you interesting in using CRM software? Check out our guide to the best CRM systems for small businesses .

The top 5 ways Amazon uses CRM

When someone buys something on Amazon for the first time, Amazon asks them to set up an account. Why? Because it makes for a smoother and more personalised experience, as they’ll get recommendations based on their interests.

This allows Amazon to tap back into what its customers like and sell to them on an ongoing basis. Amazon’s CRM brings customers tailored offers and promotions based on their past purchases – a popular approach to CRM that’s also well-utilised by the likes of Apple and Uber.

This is why a CRM system is an indispensable tool for carrying out your marketing strategy. It’s not just essential to customer service, but sales and marketing too. To execute the perfect marketing campaign, you must have a clear understanding of what your existing customers need, and a CRM software will be able to help you better analyse customer data so you can address those needs.

2. Personal data collection and storage

Amazon’s CRM stores its customers’ personal and payment details when they create an account to buy something. And no, it’s not for any sinister, shadowy purposes (we hope!) – it simply makes it that much easier for customers to purchase again. They can order with one click – knowing that their personal data is protected by Amazon Pay’s industry-leading fraud prevention tools – and have their item arrive the next day.

Just remember that businesses must comply with the General Data Protection Policy (GDPR), an EU regulation on data privacy standards . When customers are confident that the companies they do business with are protecting their personal information, trust automatically grows. This is an essential layer to add to the client relationship you’ve been cultivating.

With that in mind, it’s not hard to see why Amazon is crushing the competition .

Another great thing about Amazon’s CRM? The recommended products feature. When customers are logged in, Amazon will recommend products that might interest them based on their past purchases. Customers can also check out what other people viewing an item also bought, and explore related products with ease. Offering these temptations without pressuring the customer is what’s helping Amazon turn over billions every year.

Likewise, your customer’s purchase history, which is archived in your CRM system, can be used to provide exceptional customer service. Through this information, you can anticipate your customers’ needs based on what they’ve purchased or viewed, which will result in getting your salespeople to sell more.

▶ Read more: The Best Cheap CRM Systems

The big one. Amazon customers can deal with almost every issue they might have through their account. The returns process is all dealt with online too. And if there’s something that does require them to speak with a customer service assistant? CRM to the rescue again. Any Amazon staff they speak to will have their details at the ready, meaning quick and efficient resolutions to all problems – and more satisfied customers.

Using your CRM system, you can program ready-to-use email templates. If a customer complaint comes in and you respond immediately, this allows the customer to relax more, confident that their issue is already being handled. Besides, a quick response is a sign of professionalism and, without a CRM software, you won’t be able to pacify your customers.

Amazon’s use of CRM has been influential in the growth of its services. Its dedication to its customers led to the invention of the Kindle, while Amazon’s online Kindle Marketplace offers a tailored experience with unique book suggestions.

Amazon Prime Video has also become one of the biggest streaming services out there. It offers hand-picked film and TV choices for each customer, which wouldn’t be possible without CRM.

CRM is at the forefront. CRM is at the backend. CRM provides you a 360-degree view of what your customers need. Whether it’s the addition of AI in the system or coming up with a better product to service and, of course, retain existing customers, CRM is a huge factor in helping you unlock business growth.

Next Steps: how to start using CRM

CRM might just be the most important tool in your customer communications arsenal, but you need to know which CRM software you should invest in. A good one can help you increase sales, manage your staff, create better marketing campaigns, analyse data, and nurture leads.

Discover how CRM is redefining the success of other major brands with our CRM case studies , or jump straight into choosing a CRM system for your business today:

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Amazon Shopping App UX Case Study - An In-Depth Evaluation

Welcome to this UX case study of Amazon’s mobile app. 

Amazon is undoubtedly the leading online retailer in the US. Its rise to being a top household e-commerce brand is largely attributed to its high-converting website. Throughout the years, Amazon’s website has gone through multiple changes, and in 2011, it introduced its first mobile app. 

Yet, is it equally superior in terms of user experience (UX)? Should you replicate Amazon’s mobile layout for your e-commerce app? 

We’re afraid the answer is no. Amazon. In its bid to optimize for conversion, Amazon has sacrificed some basic UX principles that once made it the role model for other e-commerce software development. For example, the cluttered home screen is overwhelming for new buyers.

Amazon is doing great because it is in a dominant position. Buyers are already accustomed to Amazon’s layout and navigational flow. But try replicating Amazon’s layout on a new e-commerce brand, and you wouldn’t get the same results. 

Today, UX is a crucial factor in attracting and retaining visitors. An e-commerce interface with a good UX can increase the conversion rate by up to 400%.   Therefore, you’ll want to ensure that the right UI/UX design services will be provided for your e-commerce app. 

In this article, we’ll take you through a step-by-step UX review of the Amazon shopping app.

In any UX design case study, it’s important to establish the objectives of doing so. Setting the objectives provides a clear direction on how you ought to approach the UX review.

For Amazon, the objective is to determine if new, unregistered users will have a smooth experience when shopping for products on its app. As mentioned above, existing buyers shopping on Amazon for years may not be impacted by the changes as they are gradually introduced on the app.

However, a new user who’s shopping on Amazon for the first time may find the home page overly-cluttered with hundreds of product images and intersected with sponsored listings. There’s also a lack of uniformity in how the various category pages are designed. 

For example, the Baby category showcases the top brands, followed by a list of top products and subcategory selection. However, the Computers category features visually appealing images that let you navigate into different devices. 

Amazon’s take of UX design is unlikely to be helpful for new e-commerce apps. Here’s the key point. Amazon is already an established brand that’s selling to largely existing users. A new e-commerce business needs to capture new customers, and good UX is crucial.

In this UX case study, we’ll identify pain points on the Amazon shopping app and figure out how they can be improved to provide a better user experience. 

Preparation

Before commencing a UX case study, you’ll need to be well prepared for it. In this case, it means surveying competing retailers and checking out the experience of using their mobile apps. By comparing between a few competitors, you could identify similarities and differences between the apps.

In this UX review on Amazon, we turn to competitors like eBay and Alibaba. eBay serves more than 180 million users worldwide, while Alibaba is the largest online retailer in Asia. Both are successful e-commerce giants, and we wanted to know how they compare to Amazon in terms of shopping experience.

So, we downloaded the separate apps and tried them out as any regular customer will do. We noted down the process of browsing through the products, adding them to the cart, and the check-out process. The experience serves as a useful relative comparison in the Amazon UX study. 

User Research

A user experience analysis is about determining if a product fulfills the needs of the users. Likewise, an analysis of Amazon’s UX design requires an understanding of its users. It’s important to establish the demographics of users made up of Amazon’s customer base and analyze their experience using the app.

Therefore, you’ll need to set sights on user research and not the other fancy features in the app. If the users are not happy with the app, they are unlikely to buy regardless of the creative efforts in it. 

During the user research, we wanted to gain clarity for these questions.

• Who made up most of Amazon app users.?
• How do most users interact with the Amazon app?
• What are the possible pain points faced by the users?
• What’s their experience using competitor’s apps?
• How do the users make their purchasing decision?
• What are the factors that influence the user’s decisions?

In order to answer these questions, we create proto personas as it is the quickest way to envision probably users that are using the Amazon app. If you’re not familiar with proto personas, it is the process of establishing target users of a product based on the researchers’ assumption.

Proto-personas are created based on what we think the users are like. They are not based on statistics or studies, although validation can be carried out later on. Proto-personas is commonly used in user experience analysis. 

Here are some proto personas that we’ve created for this study.

• A professional executive who likes to shop spontaneously. This shopper has little time to browse through different products and would like to make quick decisions from the available information.
• A tech-savvy individual who’s no stranger to using an online shopping platform. This shopper takes the time to research a product thoroughly before purchasing. This shopper leverages features on the app and is attentive to details.
• An online marketer on the lookout for the best deals and prefers online shopping to physical stores. Ideally, this shopper prefers quality products and wants to shop in a secure environment. 
• A young shopper who’s only using the app for essential goods. This shopper takes time to compare products and is particularly interested in eco-friendly products. This shopper is annoyed by ads during online shopping.

Besides proto personas, we’ve also created customer journey maps for this case study. A customer journey map illustrates every possible point of interaction between the user and the app. It helps provide clarity in the overall customer experience and pinpoint areas with room for improvement. 

Customer journey mapping helps you to identify how different personas interact with the app. It acts as a benchmark between real user experience and their expectations. You can also leverage the customer journey map to introduce personalized features in future products.

Pain Points 

The next part in this UX case study identifies pain points faced by the proto personas when using the Amazon shopping app. To do so, we use a methodology named Heuristic evaluation.

Heuristic Evaluation is a usability testing evaluation system introduced by Jakob Nielsen in 1990. It enables evaluators to determine a product’s usability based on 10 UX principles known as ‘heuristics’. 

Usually, a group of 3-5 evaluators is tasked to evaluate a product against the heuristics. This is because it’s more probable for different evaluators to identify more problematic areas than a single evaluator. 

The evaluation starts by determining the numbers of heuristics to be used. Depending on the product, you can use all 10 of the heuristics or a smaller number. UX designers have found this evaluation method helpful in identifying UX issues before product release. It is equally valuable when reviewing an existing product’s usability.

Here are the pain points that we’ve uncovered with Heuristic Evaluation.

1. Visibility of System Status

Positive findings.

• Home page. 
• The app informs users of potential delays prior to ordering.
• Product page and shopping list.
• Interaction, which helps to understand that the product has added the cart (cart animation + vibration).
• Select Location. 
• The application determines the geolocation based on the phone number.
• Cart page. 
• User sees the total number of ordered goods, not the number of goods types.
• Includes all the necessary info about the product.

Need To Be Improved

• Search & Result page.
• The number of search results is unclear.
• There are no number of pages in the pagination - no indication of how many flippable pages.
• Several categories of the output of search results confuse users; the user does not understand whether it has displayed all results and on what principle it works.
• Not all the text from the filters fits in the line, it is not possible to see the full text.
• The delivery price is not specified.
• Filters do not display selected options, confusing options change (price).
• Product page & Shopping list. 
• Users see the product’s size, but it’s hard to understand which one she/he needs.
• There is a price range for the product, but not the exact price the user has to pay for the product.
• Users will only realize a product is not available only after choosing the color and size.
• There is a check box in the basket with a gift proposal on the cart page, but it isn’t clear which item will be selected as the gift.

2. Match between system and the real world

Need to be improved.

• Expected more specific filters on a category, on the sizes for example, but it seems like the filter is quite generic.
• Product page & Shopping list.
• Some products’ sizes are shown in numbers, but users may expect them to be shown in more familiar alphabets presented in a table. 

3. User control and freedom

• Search & results page.
• User can choose the option that suits him/her from those that the system offers. 
• Location selection. 
• A prominent message prompting you to change the location if it is not correct.
• Users can't choose the price range that they need (can’t choose a price less than $30).
• Category filter - the user doesn't understand what to choose here. 
• "Sport & outdoor" - the name of the filter does not match what can be filtered here.
• Can't get out of filters without applying them and there’s no exit button.
• Unable to locate ‘filter by size’.

4. Consistency and standards

• Clicking the "back" button brings it back to the previous page without closing the open filter. It should close down the filter on the first click, and return to the previous on the second. 
• Strange to see sorting inside filters. This is usually a separate feature for that.
• The "& Up" filter for reviews is inconsistent with the regular practice.
• Select location.
• Despite a predetermined location at the beginning, the states reverted to default when placing an order.
• Inconsistency of displaying informationDetails, descriptions, and characteristics of the product are already under the recommendations and related products.
• Non-typical usage of a drop-down for choosing the number of units.
• If you click on the "Details" button, a page opens with back navigation, although there is a top-level back button.
• Quantity selection is implemented differently than on the product page.
• The checkout button is above the items in the cart, which is inconsistent with the outside world. Usually, people read from top to bottom.
• The price for products is shown above them.
• Order page.
• Quantity selection is implemented differently than on the product page and basket.
• Strange order of fields (Country -> name -> street -> city).

5. Error Prevention

• Search & results page. 
• The system returns the right option despite errors when typing the product name in the search bar.
• No prompt for automatic street selection when filling the address (for non-US territories).
• The ‘delete’ button is not highlighted, making it easy to be accidentally clicked on.
• Can’t quickly return a deleted item to the cart.

6. Recognition rather than recall

• The search history is saved.
• Return Possibility Message.
• If you exit the screen and return, the fields will remain filled.
• The system detects a Ukrainian user but shows an American code when entering the default phone number.
• Shows default American fields in address although it has detected a Ukrainian user.
• No dropdown list with autocomplete address field.

7. Flexibility and efficiency of use

• Search & results page 
• Search with hints after entering a pair of characters.
• There is a checkbox to "make the address default".
• Very long scrolling of the product page. It is difficult to navigate and search for the necessary information - to navigate to the characteristics and reviews.
• Why is there no social log in.

8. Aesthetic and minimalist design

• Instead of indicating the items are not delivered to a specific country, the system should hide those non-deliverable items from the customer's view. 
• Many different font styles (color, size, thickness).
• Small text, not ideal for people with poor eyesight.
• Elements look like a random mess (different contours, fillets, thickness, size)—little space.

9. Help users recognize, diagnose, and recover from errors

• Shows an informational message that allows users to change the address and with accompanying warnings.
• Search results.

User Testing For Pain Points

At this point, we’ve got a list of pain points by evaluating the Amazon shopping app against the selected heuristics. However, they are merely opinions from our team, who are testing the app based on created proto personas.

We need to validate that the problems that we’ve encountered are posing real problems for users. Therefore, it’s important to carry out user testing for those pain points.

User testing provides an opportunity to understand the app from a different point of view. It reduces the risk of us being blindsided in certain areas during the evaluation.

To carry out user testing, we’ve prepared tasks that are to be assigned to 5 users that we’ve selected. The participants are asked to accomplish the tasks using the Amazon shopping app and record problems that occur. 

Here are the results that validated our earlier findings.

• Confused with the search results.
• Can’t add to favorites on the search results page.
• Irrelevant recommendations. 
• Confused with purchase screen - need to verify the info multiple times.
• The product page is hard to navigate, has too much info, and is not structured.
• Too many ads.
• Hard to compare items. It takes too long to return to the search screen.

Hypothesis To Test

We’ve identified what’s wrong with the current Amazon shopping app. To complete this UX case study, we’ll need to put together the solutions we perceive to lead to a better user experience. 

To do so, we’ve created a list of improvements for all the pain points that we’ve identified and added our thoughts to them. We aim to create a redesign of the app interface and confirm that our hypothesis on the pain points and solutions is correct.

There are, of course, too many pain points to implement in the redesign, and some could be very tedious to do so. To narrow them down, we utilize the impact/effort matrix and selected impactful changes that are easy to implement.

With the choices of changes decided, we moved on to redesigning the Amazon shopping app in the form of a prototype. We’re sticking with Amazon’s original fonts and colors as they represent the online retail’s brand identity.

Based on our hypothesis, the new prototype should result in an improved user experience. We created two different versions to gather better insights in testing.

Check out our redesign here.

Everything we’ve done in this Amazon UX review will lead to nothing if we’re not testing the prototype with real users. We need to be sure that we’ve uncovered the pain points with the existing app and that our recommendations in solving the problems resonate with real users.

Therefore, we decided to turn to a proven method to validate our assumptions -- usability testing. Again, we invited a few users with different age groups and professions and got them to accomplish a single task on the prototype. They are asked to buy a soccer glove on the prototype with UX fixes.

As the users execute the task, they are asked to note any problems and thoughts with the prototype. When the app review is completed, we consolidate the results by asking questions like:

• How was the experience?
• What was easy/hard to understand/interact in this prototype?
• Is there anything difficult to understand at first glance?
• Which version of the prototype do you prefer?

It’s essential to hold the post-testing interview in a one-on-one session. The participants are more likely to be more open with their thoughts when they can talk in comfort. You’ll also have a better opportunity to understand their mindset and behavior when shopping for an item with the prototype. 

Ideally, you’ll want to collect as much data as possible during the prototype testing. This is true whether you’re doing a user experience analysis for a 3rd party product or working on your own app.

The data becomes clear guidance to making UX improvements when revising the app. It removes guesswork and assumption from UX design. As a result, you’ll have a more precise strategy in creating UX that appeals to end-users. 

Amazon could do with a few UX lift-ups in its app, that is, if it intends to appeal to new users. As shown in this UX review, it doesn’t hurt to correct some of the glaring issues with the existing app. Users can get to their desired items with less hassle, leading to increased conversion.

While Amazon could get away with some UX bad practices, budding e-commerce stores will fare differently with the same blunders. It is vital to carry out usability testing to ensure that users have a smooth experience with the app.

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