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March 29, 2013

Amazon’s “Secret Growth Circle” focus on Improving Customer Experience

by ellenjin

Amazon growth circle

Amazon, known as the #1 online retailer in the world, claims to be earth’s most customer-centric company. I attended Amazon’s Information Session at Newcomb Hall yesterday and I learned about Amazon’s “secret growth circle”.

As showed in the picture above, Amazon aims to provide superior customer experience to its users through broader and more professional selection than other retailers. And the satisfied customer experience will create more traffic volume, which will bring in more sellers, and further build up its ability of selection, completing a positive circulation. Additionally, strong growth will result in lower cost structure, which allows Amazon’s lower prices than competitors, thus adds more positive inputs to the customer experience.

There is a serious of numbers, according to Amazon’s annual report, to back up its strong growth last year: net sales were $61.09 billion, a 27.1% increase from $48.08 billion last year; North American net sales totaled $34.81 billion, up 30.4% from $26.70 billion in 2011; North America accounted for 57% of sales in 2012; International net sales totaled $26.28 billion, up 23% from $21.37 billion in 2011; International accounted for 43% of sales in 2012.

And this afternoon I also met with a Darden’s MBA alum who will work with Amazon this August. He emphasized that, on the list of the leadership principles that every Amazonian is guided by, the first one is Customer Obsession. “Leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers.”

He interned with Amazon last summer at Seattle headquarter, conducting market research on Amazon’s new textbook rental business launched last August. I told him that last semester we had a McIntire alum gave a presentation on his failure experience of establishing a firm doing textbook rental business. He admitted that this is a challenge business for small firms given their limited resources. But Amazon has strong ability to tackle with this challenge and the two leading companies in this area already signed up to cooperation with Amazon.

Actually Amazon announced today that it has acquired bibliophilic social platform Goodreads, where users can document what they’ve read, are reading and want to read and share those lists with others. Obviously, Amazon intends to utilize Goodreads to improve Amazon customers’ and especially Kindle owners’ ability to share that type of information and Amazon’s ability to use that information in recommending new books for people to purchase, so that to further improve customer experience in the “secret growth circle”.

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