Friday, April 29, 2005 You'd Think They'd Sell Pyranhas - They Don't

This is a reflection upon Amazon has become a hotspot for the cheap purchase of many thousands of products, and is famed for its immense selection of books and more recently, DVDs, CDs, software, and electronic goods. The site can be seen as a portal to not just the products itself, but to a logistically excellent and rapid service with worldwide outlets. Amazon was one of the first eCommerce businesses, and for many years it ran at break-even. Its strategy was to pass down its reduced buying costs to the customer as its economies of scale grew with sales. The fact that Amazon exists in the physical world purely as a series of distribution centres linked by computer orders serves to keep costs low. This gave it a great advantage over other online businesses, which were more of an extension of a pre-existing chain of shops that had high overhead costs before they branched out into eCommerce. They are now the world’s best known eCommerce business.

Amazon is all about finding the most efficient way to do things, from using its buying power to sell the latest
Harry Potter book cheaper than anywhere else, to packaging its products in recycled cardboard. The internal structure of the site is designed to store information on each registered user and suggest items that you might enjoy based on past purchases or your reviews of products you already have. This is a great feature, especially when one’s taste in music or Japanese DVD’s requires a little extra help to find titles you might be interested in. Useful at Christmas time or birthdays is the ‘Wish-List’ feature, which allows users to make a big ‘I Want This’ list to email out to your friends and family (appreciate my BrainFarm? Buy me something I want here).

Another reason to visit Amazon is it’s ‘not-so-unique-anymore’ user reviews of each product, with the classic ‘5 star’ rating scale. Any registered user can create a review. See my review on
Lemon Jelly’s DVD album (when it gets posted, that is). This feature gives customers the extra information they might need to make a decision based upon what previous buyers think. Now, this suggests the question “What if all user reviews are bad? Won’t the product fail to make Amazon any money? Why would Amazon allow that?” Good questions, all! These can be condensed into one question: Why would a business put its trust in its users to advertise the products for them? The answer is not simple, but like most of Amazon’s techniques to generate revenue, it involves a focus on the customer’s best interests rather than the merchants’ drive for sales.

Gatekeeping is a process by which the operator of a public establishment can withhold certain information, either for commercial gain or through sheer lack of space. A pub which sold every beer in existence would soon be out of business through high running costs, so just serves the beers that are most recognised by the punters. In the same way, Amazon might choose to provide only positive information on the products they list, but because they have limitless space to fill up on their servers, they impart all possible information on a product and allow the user to make a measured decision. This gives the sense that Amazon is ‘working for you’, and it gives good reason for customers to keep coming back. It is, then, in Amazon’s best interests to be a gatekeeper to a very, very wide gate.


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