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Amazon turns 10

The key to its longevity? Strong tech and good service

Amazon.com opened its online bookstore 10 years ago, setting out to prove that a retailer that sold exclusively via the internet could succeed against established competitors with bricks-and-mortar stores.

The company's first decade online hasn't always been a smooth ride, and pundits have predicted Amazon.com's demise more than once – particularly when the dot-com frenzy turned to despair and many e-commerce companies collapsed.

But through it all, Amazon.com's management, led by its smiling founder, president, chairman and CEO, Jeff Bezos, kept increasing sales and aiming for profitability, which the company eventually attained in 2003.

Today, Amazon.com stands as the ultimate e-tailer, a company that has blazed a trail in e-commerce with a successful mix of innovative technology and business practices that many study and attempt to emulate.

What has been the key to its success? Industry experts point to several key factors, including an obsessive focus on customer satisfaction, constant improvements to the website's design, an emphasis on personalising the shopping experience and solid back-end technology.

As a result, Amazon.com has built a loyal following among online buyers as a solid and reputable seller. "There's a trust factor Amazon.com has with its customers. People perceive Amazon as an honest company," says Edgar Dworsky, founder of Consumerworld.org, a website devoted to consumer advocacy.

Simultaneously, Amazon has a reputation as the company to emulate among e-tailers. "The industry looks at Amazon.com as a benchmark," says a Yankee Group analyst.

From the beginning Amazon has relentlessly focused on providing good customer service, which in turn has generated a high degree of trust from its clients and a high sales volume.

The firm has earned that trust by consistently providing secure transactions, offering reliable delivery and product selection, and emphasising price discounts.

This solid trust was critical for Amazon to obtain when it was a newcomer, and it is critical to maintain now, because competition in e-commerce will heat up considerably in the coming years.

Amazon has also worked tirelessly on its website's user interface, continually aiming to make navigation more intuitive, lay-out simpler and the overall shopping experience friendlier and more personalised.

The company has been a pioneer in its relentless use of website design testing and optimisation, constantly evaluating everything, including minutiae such as the colour and shape of tabs on the site.

That is time and money well spent because, given the volume of traffic on Amazon.com's website, even a slight optimisation of its design can mean millions of dollars in additional sales.

By basing its website design decisions on usage data and not necessarily on aesthetics or internal designers' gut instinct, Amazon has managed to keep its user interface closely aligned with its ultimate goal, which is turning visitors into buyers.

Another area in which Amazon has excelled is in using past purchasing data to personalise customers' shopping experience, modifying pages on the fly to adjust them to individuals' preferences and interests. It also lets customers post product reviews and lists of suggested shopping items to aide others.

In this way, Amazon uses technology – databases and data analysis tools – to provide a type of individual shopping assistance that stores used to provide decades ago, when owners knew their customers personally. Moreover, Amazon has managed to do this in a way that most customers perceive as useful, and not as a creepy surveillance practice.

The recognition of Amazon's e-tailing expertise is now broad enough that major retailers have opened up stores inside the Amazon website, while others have hired the Seattle company to provide them with technology and services for their own websites.

Eddie Bauer, Target and Office Depot, as well as many small retailers, have stores within the Amazon.com website, making it an online shopping mall. Meanwhile, through its Amazon Services subsidiary, Amazon.com also provides e-commerce services, such as website building and hosting, order fulfillment and product transportation, to companies such as Sears Canada and OshKosh B'Gosh Retail.

Along the way, Amazon.com has grown from selling a single type of product – books – from a US website, to selling a wide variety of wares, including CDs, DVDs, clothes, home and garden supplies and consumer electronic devices from various international sites, including Canada, the UK, France, Germany, China and Japan.

Amazon.com, founded in 1994 and operational on the web since July 1995, is today a Fortune 500 company. In 2004, it had net revenue of $6.92bn (£4bn).

Amazon.com, which didn't return repeated calls seeking comment for this story, will webcast its 10th-anniversary concert bash on Saturday from its site.


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