As one of the world's leading e-commerce giants, how did Amazon develop its competitive advantage?
A decision analysis by Google shows that when faced with massive amounts of data, human decisions lag behind machine decisions. Therefore, a large amount of marketing, search engines, decision-making, etc. in Internet companies are done using data science. By making good use of data science, you can maximize the value of data assets.
When Amazon founder Bezos was doing e-commerce, he discovered that the real value of the entire e-commerce transaction lies not in the products, but in the data generated through the transactions and the accumulated customers. Specifically, Amazon uses data to gain competitive advantage in three main ways.
The first is the recommendation engine. People often get confused when buying things online because there are so many products that they don’t know what to buy. So Amazon invented the recommendation engine. Now more than 40% of Amazon’s products are recommended to users through recommendation engines. It not only helps users shorten their decision-making time, but also improves the purchase conversion rate.
Second, Amazon scans the prices of all competitors' products every 5 minutes, and then adjusts its own product prices accordingly to ensure that its products are the cheapest. Such a mechanism maximizes the retention of new users. Moreover, Amazon has a special practice: for the same product, the price seen by old users is higher than that seen by new users. Even so, old users will not be lost because, although the products they see may be more expensive than those seen by new users, compared with other websites, Amazon is still the cheapest. By doing this, Amazon allows new customers to gradually become old customers, and then slowly makes more money from old customers.
Third, Amazon will adjust logistics and warehousing costs according to the situation. For example, for the same product, a brand may sell it at one price on its own e-commerce website and another price on Amazon. If Amazon finds that the same refrigerator is sold for $2,000 on a brand's website and $2,100 on Amazon, it will then appropriately adjust the logistics cost of the refrigerator to contain the prices of its competitors, because all brand products basically use Amazon's logistics.
The above are the reasons why Amazon has a strong competitive advantage. If you want to get more information about Amazon, please continue to pay attention!
