Live from the ACC: Bezos Spills the Beans on Amazon

Chicago–You might think that building a $3.1 billion business in seven years would be a complex, confounding matter. But Jeff Bezos, founder/CEO of online behemoth Amazon.com, views his success as a matter of learning four simple lessons. In yesterday morning’s keynote presentation here at the Annual Catalog Conference (cosponsored by CATALOG AGE and the Direct Marketing Association), Bezos shared those four key lessons. He also emphasized the importance of never losing sight of a company’s mission. Amazon’s mission, he said, was to offer the biggest selection of merchandise to create a customer-centric company.

The first lesson, according to Bezos, was to listen to the customer. While that may seem obvious, Bezos said that truly heeding customer advice can be a challenge, as proved by the highly amusing customer e-mails he shared with the audience. E-mail “turns off the polite gene” in most consumers, he said, allowing them to share very blunt observations about the company. Bezos said he adopted one customer suggestion, that of e-mailing shoppers the list of items they were holding in their shopping carts for purchase at a later date, after an angry customer complained that Amazon was emptying carts after 90 days as part of its site maintenance.

Experimenting to find the best ways of reaching new customers is another lesson Bezos said he has learned along the way. Amazon tested every form of advertising, from online ads to TV and radio commercials, before confirming that Internet ads and associate programs were the most effective for the company. Bezos pointed out that unlike conglomerates such as Coca-Cola, direct marketers are in the enviable position of being able to measure advertising and affiliate marketing success.V Since 1997, Amazon has spent $8 million on high-tech as a mean of “differentiating [itself] with technology.” Bezos said that this is probably one of the most valuable lessons he’s learned so far. The continual expenditures and upgrades enable Amazon to hone its cross- selling and upselling capabilities as well as to keep its focus on the customer and constantly giving them more.

Bezos also stressed the importance of personalization. Just last week Amazon began testing a feature called Gold Box, which he described as “an exploding promotion of five offers of deep discounts. The customer has 60 minutes and can pass on offers to reveal the next one. It has the appeal of a game show.”

Another Amazon feature that Bezos highlighted: the ability to tell customers if they have already purchased an item. “Intuitively we believe this reduces our return rates,” he said.

The fourth lesson learned was the importance of partnerships. And to reinforce that point, he introduced Rachelle Friedman, cofounder/co-CEO of his most recent partner, New York-based J&R Music and Computer World, a cataloger/retailer of consumer electronics. As it does with retailers Toys ’R’ Us, Marshall Fields, and Target, Amazon will host a J&R Music World Website on its own site.

“Catalogers should be excited about the future,” Bezos said as he wrapped up his presentation. “All of your companies will benefit from the Internet, and most of you are benefiting from it now.” But it’s still early days yet, he added, and more technology improvements are on the horizon. He urged catalogers to “layer innovations with improvements in technology.”

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