Uncovering the "Amazon Effect"

NEW YORK (CRM Evolution 2012)—Data, efficiency, and customer service—these are Amazon.com's competitive differentiators.

During Wednesday's CRM Evolution session "How Amazon Became the Customer Engagement Model for Social Commerce," presenter Brent Leary, partner at CRM Essentials, unabashedly disclosed that he is an avid Amazon.com customer and Amazon Prime member. "I think people buy from good experiences," he said. "I can do so much with Amazon without talking to anybody, that for as long as they continue providing a good experience, I will continue buying from them."

Drawing on research from Forrester's ForeSee survey, it's estimated that 64 percent of customers are more likely to buy from the same company when they're highly satisfied with a purchase.

While Amazon has been lauded for its recommendations engine, and subsequently, contextual purchasing capabilities, the experience is "where things are going to have to go," Leary said. "Not just for Amazon. Not just for retailers. For any company, [it's imperative to] combine all of the information you have to make it as frictionless as possible to buy from you."

But Amazon's clout is not limited solely to the B2C space. "There are so many ways they are changing even the way we do business," Leary observed. "Amazon is going after original content, and they keep building up that content."

Leary elaborated on the notion of the "Amazon Effect," and asked audience members if they began their journey as Amazon customers buying books. Over the years, Amazon has morphed into a full-blown B2B and B2C machine. There is Kindle Direct Publishing for authors to self-publish directly to the Kindle Store. There is the Amazon Appstore for Android users. Fulfillment by Amazon is designed for the business that does not want to be bothered with managing a large inventory. Amazon Web Services lets you run enterprise applications in the cloud.

But, as new research from Forrester indicates, companies still have some trepidation when doing business in Amazon's third-party marketplace. Oftentimes, products and categories that perform well "quickly become products that Amazon itself owns and sells at prices that undercut Marketplace sellers." Forrester findings show that 30 percent of consumers now begin their buying process researching on Amazon as opposed to Google, indicating Amazon's authority as an all-in-one solution is only expanding.

While e-commerce companies will continue to struggle to maintain market share in light of Amazon's prolific online presence, an added challenge is the fact that the company they're using to power their Web Services could be the company they're directly competing with in commerce. Forrester estimates that Amazon Web Services is involved in 20 percent of ecommerce sessions in the U.S., putting Amazon partners in a difficult predicament.

Leary said that companies will simply have to alter the way they do business, and will need to continue to innovate. A next logical step for Amazon will be to continue to expand on its offerings to further drive loyalty. As an example, Leary said that Delta flights that currently offer free WiFi access to Amazon's e-commerce site could feasibly extend free Internet to a passenger who is also an Amazon Prime member, and who has reached a specific threshold in purchase sales.