How Amazon.com is thriving in a horrendous retail climate

http://www.slate.com/id/2210620/

by dominik • 17 years ago

44 25 17 years ago

dominik• 17 years ago

An excerpt illustrating the value of underpromise, overdeliver:

"For a store that aims to give you a bargain, it also excels at customer service. Here's something that happens often: I'll buy an item on Monday afternoon and be told to expect it to arrive Wednesday. Then, sometime Tuesday, the UPS guy rings my door—amazingly, Amazon has moved the product from its shipping center in Nevada to my apartment in San Francisco in less than a day, for no extra charge."

Imagine what the author would have written had Amazon said the package would arrive Tuesday but the packaged didn't show up until Wednesday.

patio11• 17 years ago

I once worked for the mail order arm of an office supply store which you all know. We have the same distribution-centers-across-country-situated-for-maximum-deliverability system that Amazon does.

All the company literature says something to the effect of "Order by 3 PM EST and your item will be shipped to you in two business days!"

This is, not to put to fine a point on it, a lie. 97% of orders put in by 5 PM EST will arrive the next business day. We expect that. We're '($# fanatical about achieving it -- if that number slipped to 95% heads would roll at several places in the company. But we never, ever tell customers that. Why? Because if we told them that we'd be pissing off 3% of our customers for forever. As it is we please 97% for forever. Much better deal!

This lie has some interesting consequences when a customer calls to expedite an order. (For example, "Oh crikey, I was supposed to have this order in days ago but I forgot, if it isn't here by Thursday I'll lose my job -- what can you do for me?") Our line representatives -- that was little $10 an hour me -- are given, have, and use the authority to upgrade customers' shipping at our discretion. So I could look at the big blinking count-down clock to 5:00 PM, note that there were 6 hours left to the cutoff, and say "Oh, no problem ma'am -- this will be there tomorrow". But that would spill the beans! So instead I'd say "I tell you what I'm going to do ma'am, I'll upgrade you to our fastest available shipping through FedEx at no extra charge." And then proceed to cost the company about a day's worth of my salary, just to avoid losing face in front of someone who I'm busy wowing the daylights out of.

I cost the company substantially more in "accommodations" than I did in salary for at least some of my tenure there. The computer flagged me for it twice. My line manager came to me and said "Hey Patrick, the computer has flagged you for being overly generous. Anything you want to tell me?" and said "I felt that accommodation was necessary knock the socks off of [customer name]" and my boss said "Right answer! Carry on."

Which is how you get a 99.X% customer satisfaction metric for the quite pedestrian business of selling paper and pens out of a catalog. (Quite profitably, I might add.)

I'll take the liberty of keeping the company anonymous and slightly altering the above internal metrics. They always treated me well and that buys a lot of loyalty. So if you need to buy your office staples, well, you'll just have to find your own preferred service provider.

nlanier2• 17 years ago

Amazon anecdote: I bought a very expensive Canon 70-200mm lens for my camera on a Thursday afternoon. I had the lens shipped overnight so that I could use it for a weightlifting meet to be held that Sunday. Unfortunately, amazon.com informed me, the item did not ship until Friday, which meant I would not get my product until Monday - This, for obvious reasons, was unacceptable.

So I emailed amazon. Twenty minutes later I got a CALL from Executive Customer Relations and they spoke in great detail about how they would ASSURE me I would get my product with Saturday delivery. They canceled the existing order mid-shipment and sent out another one with Saturday delivery AND killed the exuberant shipping charge. I got my product in time to use that Sunday and I was a happy camper.

That, my friends, is how you kick ass at business.

electromagnetic• 17 years ago

Agreed, I'm always amazed that I order something knowing it's going to take time. I ordered a couple of books, one of which was out of stock and was estimated to arrive in 1-2 weeks, so I was like sure whatever I'll just take the free delivery. I got a dispatch order at 8am the next morning and it arrived by the friday, it took a total of 4 days. This has happened to me multiple times and simply amazes me.

nlanier2• 17 years ago

Absolutely. I mean, I was blown away. Blown away. They even called me the week after to make sure everything was OK and to ask how the photo taking went. You expect that sort of personalization and care from a smaller company but it TRULY is something when you see it from one with a $30 Bil market cap.

I haven't done business online with anyone else since (on big ticket items) and probably never will.

mdasen• 17 years ago

Businesses thrive like Amazon by being efficient and well polished. Amazon is able to handle exceptions well because they do such a polished job of the majority of orders. When exceptions are such a minority, it's easy to give them the time and attention that they deserve. When exceptions are always popping up, you can't afford the labor to deal with them in a way that makes customers happy. When exceptions aren't usual, their added cost doesn't make that much of a difference to your bottom line.

Amazon automates their system well and runs a tight ship where most orders go through with no hassle, no interference, etc. That makes it easy for them to spend a little more on certain cases to make customers happy.

Part of it is just that other retailers aren't so efficient. If you're hiring store staff, most of the day people are in work and they have little to do. Even during busy times, they won't be able to move merchandise like Amazon where it can be made more assembly-line oriented.

So, Amazon is able to give people the experience that they want because all the easy things take no time for them.

DaniFong• 17 years ago

There's part of that, sure. But they don't have to care that much. It means a lot that they still do.

rudyfink• 17 years ago

I am amazed "tax free" isn't anywhere in that article. Being tax free and having what is certainly a more affluent shopping base absolutely can't hurt in tight economic times.

I will say Prime is simply amazing. Amazon with it and Amazon without it are entirely different experience. With "super saver shipping" my entire order would need to group and be ready, which literally took months on some occasions. With Prime everything ships as soon as it is available and usually within the same day.

Elepsis• 17 years ago

Actually, at least for me, for a while now the super saver shipping hasn't had the constraint of needing to group all your items. Indeed, they explicitly warn you that your items may ship separately (at no extra charge).

Whippet• 17 years ago

My Anecdotal experience:

I need a new iPod cable and as I was at my local shopping center, I decided to check at Circuit City. I expected the price to be ~$10.00 but the prices was $24.99

I checked with amazon when I got home. I was able to buy a 3 pack, regular cable, car charger cable and 110v outlet cable for $8.00 including shipping.

It's not a mystery why retailers are suffering when you see price gouging like that.

lacker• 17 years ago

Amazon anecdote from today:

I was at a bookstore and saw a Vernor Vinge book that I didn't have already. Unfortunately it was $18 for the paperback. On my gphone I checked on Amazon and found a used-but-mint-condition copy for $3, plus $4 shipping. So I just ordered it from Amazon and left without buying anything.

I do feel bad for not helping out the bookstore, but it's hard to spend an extra $11 for nothing.

gravitycop2• 17 years ago

I do feel bad for not helping out the bookstore

Why would one want to help out a bricks-and-mortar bookstore?

tokenadult• 17 years ago

Because the browsing experience is different at brick-and-mortar bookstores from that at online bookstores. I love the way Amazon reads my mind and suggests products based on what I've bought before, but I've also discovered cool books by chance glances at the shelves at the local Barnes and Noble, so I still shop there too.

unalone• 17 years ago

Because bookstores form communities around them? I went to a book discussion club at Barnes & Noble for half a year when I was younger.

Or perhaps because the people who open non-chain bookstores are avid readers, often obsessed with helping out a community, and they love what they do, despite the fact that it's not exactly an easy business?

I know we're cool and new-wave but it's one thing to say Amazon's good. It's another to question why somebody would want to help out a business model that's never been lucrative, whose practitioners more often than not do it for the joy of helping people find a good read.

kqr2• 17 years ago

He discovered the book at the bricks-and-mortar bookstore so its beneficial to help them out once in a while. Even though I buy a lot of books online, I still discover a lot of things by good old fashioned book browsing.

For me, if the book is under $10, I usually buy it locally; otherwise I order it online.

Zev• 17 years ago

Because there are some awesome indie bookstores (If anyone is on Long Island or NYC area, check out Book Revue in Huntington) that are, unfortunately, going out of business.

Barnes & Noble or Borders are hardly the only physical dead tree bookstores out there.

jorgeortiz85• 17 years ago

You should have left them a tip for more than $0 but less than $11. Then everyone comes out ahead.

Mistone• 17 years ago

we launched our retail apparel site in October in the midst of the huge stock market loss days. on a suggestion from my cofounder we started listing on amazon in early December. Dec sales from amazon accounted for a 1/4 of sales, and more then 3/4 in Jan, as sales dipped on our site.

we get tons of sales on amazon from places in the midwest where on our site we get mostly right and left coast locations.

im actually lifting forecasts right now due to the strength of that channel. additionally we are often the low price on amazon, and the item is marked up from what is sells for on our site, so its not low margin dumping ground like eBay. horray for amazon.

njharman• 17 years ago

I really like Amazon as a company, I know their products, market and believe AWS, Kindle are great growth areas. I really wanted to buy their stock but I dollar cost avg my existing positions instead. AMZN has gone from ~$40 when I was looking to over $60 today. nharman is a sad panda.

zach• 17 years ago

People who live off the beaten path love Amazon, and especially Amazon Prime. The big box retailers are still good for everyday stuff, but you really appreciate the convenience, price and selection Amazon offers when you have severely limited retail options.

truebosko• 17 years ago

At the business I work at, we have been thriving as well. We're not anywhere near as big as Amazon, infact we only have 5 employees (and one part time accountant)

Yet, we've had our 3 best months in a row since November, and February is shaping up to be pretty good

We sell outdoor and indoor recreation items, so no one needs them, but everything is below retail. We also sell through about 5 different channels (Our websites, Our small retail store, Pennysaver, Kijiji, eBay..)

We also make sure to ship everything same-day, answer every customer email within 12 hours, and run a super tight ship when it comes to inventory counts so we're not in a big mess.

Of course, I'm sure there is many guys like us but I thought it'd be ok to share some good news from a small retail business :)

omouse• 17 years ago

Retail stores are basically warehouses. The consumer has to waste some time looking through all the inventory and some of it may not be there, etc.

Amazon, on the other hand, hides its warehouses and gives you a clean interface to the inventory.

endtime• 17 years ago

Here's a little story about Amazon's efficieny from another perspective.

When I applied to Microsoft for a summer internship, the process was: go to info session, submit resume, wait a couple weeks, be asked to schedule an on-campus interview, wait a few days, be invited up to Redmond, schedule flights, fly up to Seattle. Pretty standard, but...

When I applied to Amazon, the process was: Go to career fair, hand them my resume, have my resume looked at for ~20 seconds, be asked to write a C-string function on the back, wait a few days, and be invited for a final round interview on campus.

The point is that they cut out an enormous amount of overhead by recruiting this way. They probably wouldn't get much information out of a typical first round interview or phone screen that they didn't get by asking me to write that function on my resume and keeping an eye on how long it took me. And rather than fly people up to Seattle, they probably just fly 2-4 interviews down here. Amazon strikes me as a very shrewd company in some ways.

How Amazon.com is thriving in a horrendous retail climate

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