Report prepared for VG Jones concerning redevelopment and enhancement of their online business presence and e-business strategy.
The Internet offers unique access and huge potential, yet it is arrogant to believe that this is an easy environment to succeed in: the “dot com bubble” has shown this over preceeding years . The Internet is an incredibly competitive market, with price just one issue and an issue not as critical as some would think. In the start-up phase discounting as used as a means to win customers, auction sites also abound and many new forms of commercial activity are emerging. However, being cheaper that competitors is not the only consideration: in order to succeed, companies need to offer excellent service and ease of use to customers, many of whom are unfamiliar with the Internet due to its rapid growth. Most of the e-businesses are just following trends, and failing as a result. Amazon.com made a trend and continues to break new ground: they were flexible enough to respond to the auction fad and will continue to offer customers unique retail experiences they can trust.
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Amazon.com, Inc. is a Website where customers can find and discover anything they may want to buy online. The Company lists millions of unique items in categories such as books, music, DVDs, videos, consumer electronics, toys, camera and photo items, software, computer and video games, tools and hardware, lawn and patio items, kitchen products, and wireless products. Through its Amazon Marketplace, Auctions and zShops services, any business or individual can sell virtually anything to the Company’s approximately 30 million cumulative customers, and with Amazon.com Payments, sellers can accept credit card transactions. In addition to its U.S.-based Website, www.amazon.com , the Company operates four internationally focused Websites: www.amazon.co.uk , www.amazon.de , www.amazon.fr and www.amazon.co.jp . The Company also operates the Internet Movie Database, www.imdb.com, a comprehensive and authoritative source of information on movies and entertainment titles, and cast and crewmembers.
Amazon Website Analysis
Impact of the Home Page
Amazon has been a pioneer in the designing of e-business homepages: “From Amazon to eToys, major e-commerce sites are increasingly adopting a strikingly similar layout on their home pages. While colors and fonts vary, the tops of these sites feature not just the company logo, but a horizontal row of tabs for general site navigation, often underpinned by a row of subtabs; a search box; a triumvirate of “help,” “shopping cart,” and “my account,” usually at the top right; and a left-side vertical column beneath it all offering more detailed navigation.” (Marlatt, 1999)
Further evidence from Marlatt’s article indicates that roughly 20 percent of the elements on an e-commerce home page are becoming standardized. Although this may lead to complaints about a lack of originality in webpage design, and Amazon.com claims that others are simply following its lead, experts believe that, as early as 1999, the trend seems destined to help consumers by allowing them to move from site to site without having to relearn a new layout each time. The implications of this are that designers can never assume that their site is the only one that people use, so it is important to plagarise good user interface designs, rather than create brand new ones that people would have to learn all over again. As such, the proposed new website design for VG Jones will be heavily based upon incorporating the company’s existing branding and marketing into a generic structure that is striking, like Amazon.com’s, but also easily recognisable and usable to any regular e-commerce user.
Context of use
Amazon.com’s website is used by a variety of consumers in a variety of ways. Many consumers simply visit the site directly looking for a specific article, or with specific search parameters in mind, others are “just browsing” certain categories or with vague parameters in mind, possibly for a gift idea. However, an increasing large number of consumers are coming from the “Amazon Associates Program” where Amazon pays a small one off royalty to the any registered site that directs a consumer to it for the first time. Video Business (2002) reported when amazon.com made available, free of charge, new software that allowed “registered third-party Web sites to search and display items that are available at the e-commerce giant.” At the time, more than 800,000 sites were enrolled in the Amazon Associates Program, and since that time the number has increased dramatically, and contributed to Amazon’s growing profitability, as well as its exposure and customer numbers.
With this in mind, VG Jones’ site would have to aim to cater to these three groups of consumers as well as Amazon does. It would have to ensure that its search engine was state of the art, allowing visitors with specific parameters to find the object they are searching for quickly and easily, lest they become frustrated and begin searching another site. Equally, it needs a functional and straightforward navigation system that allows browsers to find the category they are looking for with equal ease, whilst not being overly restrictive. The referral business, Amazon’s most dominant and recognisable area of customer acquistion, ironically could be the easiest to break into: VG Jones simply needs to launch a similar program, and enrol as many of the major search engine and shopping sites as possible, ensuring that people have the choice of an Amazon or VG Jones product wherever possible.
Usability has long been viewed as one of Amazon’s greatest strengths, and is largely covered in the “Context of Use” section above, for customers with specific product requirements. However, New Media Age (11/11/2004) has recently reported that etailers could double sales made from keyword-based searches within a site if they improved poor search mechanisms, based on its study of British retail sites. The study, which included, Amazon, revealed that on average only 43 percent of all goods available were listed in results after shoppers searched for particular items. The article cites this as a key usability issue and blamed etailers for using unsophisticated search tools that don’t predict the varying search terms and word formations consumers use. Catriona Campbell, chairman of The Usability Company, claimed that this is a common problem with retail sites, and that it’s extremely important that etailers watch how people are using their search engines. According to the report, although online sales account for just 7 percent of total British retail sales, the market value is huge, with the Interactive Media in Retail Group (IMRG) estimating e-shopping to be worth £17 billion in 2004. Meanwhile, online sales in the U.S. rose by 28 percent in the third quarter of 2004 on the previous year, according to analyst Forrester.
These two pieces of information reveal a key potential way for VG Jones to challenge Amazon and succeed. If only 43% of goods available are being listed, then it is possible that around half of all potential online customers are being converted to true online customers; hence in the UK there could be a further £17 billion of business available to a site with a truly accurate search engine. Thus, if such an engine can be developed, or licensed, by VG Jones, then it could conceivably compete with, and maybe even outgrow, Amazon over the next few years, especially given the rapid growth of the e-commerce market.
Page layout and navigation
Layout and navigation are more of a concern for the users who are simply browsing: interested potential customers who, if they can be directed to the right product, can become buyers, and if the process is straightforward, possibly even loyal customers. Unfortunately, it appears that here Amazon is doing everything right: Wolf (2004) reported that: “The pioneering electronic-tailer Amazon.com ranked highest among 52 cyber stores analyzed in a 2004 Customer Respect Study that grades electronic-commerce sites on ease of navigation, responsiveness to inquiries, privacy protection, customer focus, openness and honesty of policies and regard for customer data.” This survey, which was conducted by the Consumer Research Group, a research and consulting firm in the U.S., showed that 54 percent of shoppers abandon Web sites due to difficult navigation and that nearly 30 percent of retailers share customers’ data without permission.
Given these statistics, it is clear that navigation is another key to successfully attracting customers, and creating the all important loyalty. As a seperate side issue, in order to maintain customer loyalty, and be seen as an ethical business, it has equally been shown that it is important that sites respect customer’s privacy and data. With this in mind, VG Jones’ new website should focus strongly on ease of navigation, borrowing heavily from Amazon’s layout, and using focused consumer surveys to determine what other features customers would like to see in a site, and implementing these wherever possible, but without detracting from the overall navigation. Equally, VG Jones should ensure that the data protection act is adhered to at all times, in spirit as well as letter, as the Internet is well known for spreading unfavourable news at high speed, and thus ethics become even more important in the e-commerce markets.
Information content is one of the least understood dimensions to e-commerce: too little information and the consumer may be unwilling to buy something they have not had the chance to see. Too much information, and the consumer may feel that they are being misled or sold to, or may simply be confused, especially if the information is technical. Amazon’s system seem to tred the middle path quite skillfully: a reasonable amount of information is released at first, with the option for consumers to navigate to more complex and technical information should they wish.
However, there is another dimension to information, which Nutley (2004) believe will be more important than this in the long term: the personalization of information. Personalization has long been one of the great dreams of interactive media, and Nutley claims that the past four years have exposed a significant problem with this dream: its cost. As a result, its other problems are becoming apparent: the two most common methods of personalizing content for an individual are collaborative filtering, the technique used by Amazon to produce its recommendations, and channel selection, where the user specifies what they are interested in. Unfortunately, collaborative filtering can easily be perceived as attempts to sell more goods on the back of a current sales, and channel selection relies on the user making a conscious effort to inform the retailer, which many refuse to do for fear of receiving excessive promotional correspondance.
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In terms of information content, it is difficult to make recommendations: it is clear that a balance should be provided in terms of information to the consumer, not overloading them with too much information, but making sure all information is available, so as not to mislead the consumer, or provide too little information to those that require it. In terms of gathering information, there are the ethical considerations highlighted in the Navigation section, which must be balanced with the economic costs, and practical difficulties of gathering and using consumer data.
Amazon Business Model Analysis
It takes a great deal more than inexpensive global access to succeed: increasingly many companies claim to offer one-to-one relationship marketing but with little regard for the true scope such a strategy requires. One-to-one marketing is something you can not implement after reading one book. It is a great marketing strategy but it takes experience, investment, and most of all a respect for the customer, something many retailers simply do not have. You may learn a couple of lessons, but long-term success takes a commitment to succeed. (Budd, 1999)
Even after the dot com bubble burst, many people still expect the secrets of direct marketing to be so easy to attain. despite high failure rates even amongst experience experts. Reading a database may attain short-term success, but a long-term one has to possess some knowledge and experience of the customer. As such, Amazon’s business models and competitive advantage are based upon the three concepts of loyalty, quality and dependability.
Customer loyalty is critical for success and Amazon finds over 40 percent of first time customers will reorder, due to Amazon.com being customer-focused, rather than product, technology or marketing-focused. An even more critical concept is that they are winning the cross genre loyalty of their customers: by providing a good service they have won not just the book customer, but their entertainment spending and soon their commodity spending and maybe later others.
Quality is also essential and any Amazon customer knows that they can rely on a total customer service package, due to Amazon’s easy to navigate interface and page design, proving that a great design is worth more than the best price. Also an important element behind the quality feel of Amazon is the e-mail service that informs customers of the progress of an order. Many people also admire the ability of Amazon to make recommendations without insulting the customers intelligence nor overwhelm with over abundant messages, due to its information content handling. (Budd, 1999)
Finally, dependability is what Amazon.com has invested in from the start, and persevered with throughout its early losses, and is what drives Amazon ahead of any competition. Too many e-commerce solutions exist today which have tried to succeed without making the investment necessary to provide fast and efficient service. Amazon.com’s customers know they can trust the service so the idea of moving happy customers into other areas of merchandise and services is not a difficult one to arrive at.
Final Summary and Conclusions
Amazon’s dedication to their customers, and their policies of loyalty, quality and dependability, are strongly backed up by the ease of navigation, availability of information, ability to cater to a diverse range of users, and respect for their customer’s data. It is this that has lead to Amazon’s dominance of the e-commerce retail market over the last six years. However, in this six years, Amazon has not truly evolved with the times, in order to better serve its customers, rather it has relied on the continuing inability of its competitors to actually improve on its formula.
As a result, if VG Jones can successfully develop a website in a similar fashion to Amazon’s, whilst also making improved offerings in the vital search engine and navigation areas, they can wrest customers away from Amazon and also tap into the vital new customers that are a feature of the rapidly growing e-commerce markets in the developed world. With “ 54 percent of shoppers abandon Web sites due to difficult navigation” and “only 43 percent of all goods…listed in results” if is clear that here is where the niche lies, and here is where the competitive advantage can, and must be gained, in order for VG Jones to beat its major threat.
1. Budd, M. (1999) An Amazon. com Story Lessons Learned! Direct Marketing; Vol. 62 Issue 3, p. 57.
2. Marlatt, A. (1999) When imitation works. Internet World; Vol. 5 Issue 31, p. 60.
3. New Media Age (11/11/2004) Poor search functions are hitting sales, etailers told. p.4.
4. Nutley, M. (2004) Context will be king in the Web’s second decade. New Media Age; 7/22/2004, p. 16.
5. Video Business. (2002) noted. Vol. 22 Issue 29, p. 38.
6. Wolf, A. (2004) Amazon Tops 52 Cyber Stores In Customer Respect. TWICE: This Week in Consumer Electronics; Vol. 19 Issue 12, p. 16.
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