Redmarketer

February 4, 2009

Amazon Ecommerce Performance Tools

Filed under: Digital Distribution, Information Supernova, School — Robert John Ed @ 4:26 am

One thing that I’ve learned from my information decisions sciences course already is more detail regarding Amazon and their web tools for business.  I’ve been a big fan of Amazon for selfish reason for some time.  They offer a great layout, search and informational product on their site.  I spend a lot of money at Amazon every year (for me, anyway) and often link to their site; by the way, in case you were wondering all of those links to books and CD’s aren’t affiliate links either, I’m genuinely trying to avoid any attempt at garnering profit from this blog.  It’s just a corollary for my normal job, marketing.

Jeff Bezos also strikes me as an intelligent and strategic CEO.  I’ve read up on Amazon a few times now, including for a strategy course that showed his battle with other major book retailers and the convergence online.  Their competition has altered significantly now, I’d argue that their next big opponent is iTunes and their music store.  They happen to be much better suited to fight for the online turf.

Yet this post isn’t about any of those more traditional business models, online or not.  It’s about Amazon creating and optimizing something the world had never really seen, building an ordering and distribution system that allowed for millions of individual recipients.  You may ask what about Walmart and their logistical efficiency?  Well that is in itself something quite impressive, but is a system contingent on big box retail and  a smaller number (thousands).  The scale and efficiency required to contain, analyze and accurately work with data on the level of Amazon is truly impressive.  So what they eventually figured out is that this knowledge was a very expensive and valuable investment for them.  They began to offer their services on a pay as you go model, which killed fixed costs for companies like Target, who now use these services to run their website.  What’s at stake here?

When you really analyze where etail is going and what it means in the grand scheme of things, I have to imagine that Walmart is looking into developing their own system.  Walmart makes hundreds of billions a year, they are the largest company in the world.  Amazon makes a little over 14b. Funny thing is that a lot of that is due to the  money made on the capacity doled out to companies using their services.  They became profitable after building those services. Certainly not a bad sum.  Eventually, though, things will alter in that people will spend a lot more of their income online.  Maybe I’m wrong, maybe Walmart is focusing on their core competency and not worried about the distant future when younger generations are spending online.  It is, after all, some time from now.  Yet I can’t help but think that if anyone should be worried about their pie getting cut up, it’s Walmart.  I don’t think they’ll build web services it the same manner that Amazon has, I figure they’ll work on building a system that’s conducive to continuing their logistical efficiency and low pricing structure online.  Regardless, this was a great thing to learn about and reveals a lot in the grand scheme of ecommerce and where it will go in the future.  That is neat.

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