The American online retailer Amazon.com has redefi ned bookselling. Its culture appreciates the potential of technology, with the company using information in four key ways: 1. To minimize risks by analyzing information from millions of customers to see how and when they purchase, enabling Amazon.com to reduce the level of risk. 2.To reduce costs by using technology to control the way it manages its inventory and suppliers. 3. To add value and help customers by offering reviews of books and free downloadable information, and by treating its home page as an individual storefront for each customer—for example by tailoring lists of suggested titles that the customer may enjoy based on previous purchases. 4. To innovate.
Amazon believes that, to rival its competitors, an innovative approach is essential in order to improve the value and service offered to consumers. What matters is not simply what information exists, but how that information is used to build competitive advantage.
Interestingly, many other retailing companies have now followed Amazon’s 4 USING CUSTOMER INFORMATION 111175-100 GI Business.indd 9 1/5/09 10:38:10 10 • 100 GREAT BUSINESS IDEAS lead. For example, Apple’s iTunes and iStore have done for music retailing what Amazon did for bookselling, using many of the same principles. In practice • Treat each customer as an individual. For example, music retailer iTunes tracks the purchases of individual clients and provides a customized webpage designed to introduce a client to new buying opportunities that appeal to his/her personal taste.
Use the internet to provide information for the individual—even if your business does not carry out its primary operations online. By collecting customers’ email addresses, a business can develop a highly valuable and intimate marketing strategy.