#1. There’re not always the cheapest. Other players like Buy.com can undercut them. But Bezos’ sharp mind turned lemons into lemonade. They took a somewhat failing venture – “zShops” – and transformed it into a monster via the “New and Used From…” option.

They made a rule for other vendors looking to tap into Amazon’s huge and loyal customer base: You can sell your wares here to our customers, but ONLY if you sell for the same or LOWER price than us. WHATT?? Yes. Extremely counter-intuitive, but solidly logical. Sure, Amazon.com is going to “lose” the sale to competitors selling to their customers on their site when the competitor has it for a lower price.

So what would Amazon.com gain from this? A) It pretty much guarantees their customers base keeps coming to Amazon.com because there they’ll find the lowest price even if it’s not from Amazon.com directly (“one stop shop”) and B) Amazon.com still gets a cut of the sale, without the headache of logistics, warehousing, shipping, and carrying costs.

That one move puts Bezos in the CEO Hall of Fame in my book.

#2. Often when they are the cheapest, they’ve got damn solid math behind it. They sell at a loss on a number of SKUs. But it’s strategic. Same way Walmart built their empire with their “opening price point” gambit.

#3. They also play the “Turkish rug merchant”. Given they’ve built up the most consummate repository of detailed, quality and authentic consumer product reviews, you go Amazon.com first to research. In effect, they’ve spent two full hours with you explaining all the ins-and-outs of how you can differentiate quality rugs from lesser quality rugs.

And they’ve been serving you hot mint tea the whole time. Sure, you could wander around the dusty Web and potentially find it for a few bucks cheaper, but that just wouldn’t feel right. You’re warm and cozy, and you’re just one-click away from having the merchant slap an international mailing label on the rug and you can get on with your vacation. Why go anywhere else?

They’ve been data-crazed from the beginning and actually put their money where their mouth is. I’ve got some upcoming posts on my site http://www.benchmark-analytics.com where I discuss determining a/b test length and prioritizing test concepts. Some of what I discuss corresponds with the philosophy and practice around marketing experimentation at Amazon.com.

Totally agreed! I still remember ordering a cell phone from some NYC tech department store. Boy, was the return and customer service process a nightmare! Back those days everybody thought they could be an eTailer if only they had Fedex come by and pick up parcels. Not so, it takes some real customer service and professionalism.

But isn’t the online reputation thing a good one, thanks to customer ratings and reviews. When you walk into a physical store you have no idea what other customers experienced. To that effect, Yelp is awesome too.

Akin

And I got to agree with your statement about Bookstore for inspiration and entertainment . Seems like many are gravitating towards coffee-houses with books being the secondary reason for visit.

You too have a good week.
Ned

As to Amazon, I have to admit I go to Amazon as a first leg of search/research on books, music etc. mainly because of two reasons: (a) the brand name (even though I know other booksellers have comparable sites, I still have Amazon stuck in my mind more deeply and so think of it first), and (b) convenience (being online it is much easier to search from anywhere/anytime so long as you are connected to the net). However, my conversion with them is not so high and here the price and time definitely kicks in. If I am near a store (Barnes and Nobles, Borders, or any other), many a times it is more efficient for me to just swing by and get what I want than pay extra (shipping) and wait a few days to get it. Now this situation is changed if I am giving a gift in which case I do end up buying it from Amazon.

Bottom line, as you suggest yourself, I also think that even the best targeted marketing will not result in a proportional sales unless other criteria/needs are satisfied. For sure it can play a big role in the ‘acquisition’ arena but the site has to address the question of “what next” once the traffic arrives at their site.

As to your comment about Amazon withholding access to book research — well, I personally think that would be a bad idea as there is no dearth of research avenues (at the minimum there is always Google ). I think the stress should be more on offering a value-proposition to the consumer that they just cannot refuse — and this need not be the cheapest product but more likely an interactive vector product of priceXconvenienceXavailabilityXurgency (just as an example).

Bottom line – analytics does not create needs (and by extension sales/conversions). What good analytics does is to arm the various folks in Sales/Marketing/Pricing with the knowledge necessary to exploit those needs by creating a good proposition.

Enjoyed the read.

If I try to buy a replacement power cord on ebay on my computer I’ve got to go thru 5 or 6 screens just to pay. There’s no way I’d even try that on my iphone.

for me that’s important and cool