The customer-related management software that Amazon.com has developed was since its launch one of the most advanced technologies. But it did not offer only reliability to the company in order to pursue its business; it also helped it improve its business. If you want to have a successful company that gains and maintains a comfortable market share, you have to create loyal customers. The first step in creating such customers is to have satisfied customers. Satisfaction is what will bring the customer back, again and again, to purchase from your company, thus turning him into a loyal customer.
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The software developed from Amazon.com tried to identify people’s desires and needs by collecting the data of what they have viewed and purchased in the store before. This way it recommended to them other items similar to the ones they had previously viewed. The same software allowed customers to view the prices and offers for these items in rival competing online stores so that customers could make a comparison of the prices and quality.
This was not only a technological easy-usage of the site but also had a major impact on cutting the time and effort needed by customers to find what they wanted. Thus, by being fast as a website in finding what you want and transparent by allowing the prices of competition to be viewed at the side of yours (regardless if that price was higher or lower than your price) Amazon.com software began creating satisfied customers that turned, again and again, to purchase other books or items on the site. This way the CRM helped Amazon.com gain a considerable market share and retain a competitive advantage over other similar sites.
How operating efficiencies are realized in order fulfillment activities of Amazon.com
As mentioned by the founder and CEO of Amazon.com, the company realized that it had to find ways to respond adequately and fast to customer needs and desires. Thus, two main changes were to take place in order to fulfill this promise. First, Amazon realized it needed to have its base warehouse where it will collect and preserve the main items it will offer to clients. If it were to completely rely on suppliers the time of response to customer needs would prolong and it could not manage the quality as it wanted. But since it is not possible to have in store all the items offered the company also pursued a partnership broadening policy even with its direct competitors.
Amazon.com kept expanding its product offering in order to respond adequately to customer desires and needs and form a customer satisfied group as large as possible. Also, by managing to reduce the time of getting all the items required from an order, being those items present in Amazon’s own warehouse or by other providers, its warehouse cuts down the company’s costs. At the same time, it creates a positive link with other providers by selling their products, which have their own interest in pursuing business with Amazon.
But this excellent management is due also to the fact that Amazon has not been operating with full capacity until now, instead it has been with only half of it. With the increase in capacity usage of the own warehouse, Amazon might not be able to continue lower costs anymore. This is due to the fact that the warehouse will be busy with processing the orders with their present in-house items and it will have a negative impact on the timing and efficiency with mixed orders implying items from other providers. Another problem is that since the warehouse operations are sensitive to the state of the economy, the sales could go down due to external factors not related to Amazon’s service quality.
Customer’s privacy risks
As mentioned in the reading, the Purchase Circles database service enacted by Amazon.com raised concerns among customers. The company did react by offering clients an opt-out option if they emailed but still it has been operating this service in the background. This is due to the fact that customers have to read the fine prints and send the email to the company which means spend more time on the web for things you did not intend to spend time for. It is funny but without this database, Amazon cannot respond adequately to customer’s needs and desires. In turn, the stopping of data collection means to lower the company’s quality. On the other hand, there exists the risk that this data could be used by governments of other organizations without the consent of the individuals. This would constitute a breach of their individual freedoms guaranteed by the law.
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It could happen that hacking takes place into the database of Amazon.com and so the data could also be used by other people or groups with the intention to harm the individuals.
Taylor, W. (2006). Introduction to Management. Ninth Edition. Prentice Hall: New Jersey.
Gomez-Mejia, Luis R.; David B. Balkin and Robert L. Cardy (2008). Management: People, Performance, Change. 3rd edition. New York: McGraw-Hill.