Hey man, can you please order something for me? I'm writing my blog right now, and I've to complete it by today.
Yeah sure, why not? What is it you want to order?
Thanks, please order the book "The Everything Store".
Okay, here you go… order done! By the way, why are you ordering this book?
Haha, do you know whose is this book about?
Yeah, I think it's about Amazon, right?
It’s not only about Amazon, but about its Godfather, Jeff Bezos!
Okay, but what's so special about him that you’re buying a book on him?
Well for that, you've to listen for the next few minutes. It's almost done.
Wait wait wait, you were writing about Amazon all these days?
Yes, and I'm completely stunned by the strategies and the mix of data and marketing they use. I mean it's out of the world!!
So, you're buying a book written over Amazon from Amazon because you became fascinated by Amazon.. I think I found a inception going around here… lol, sorry for my poor joke. You please tell me what is so special about this Jeff Bezos and Amazon?
That was indeed a poor one, but don't worry.. You'll become better. Anyway, let's get into it, shall we?
What is Amazon?
So, Amazon is an American multinational tech company which focuses on e-commerce, cloud computing, digital streaming, artificial intelligence; nowadays it is also rumored that Amazon might get into crypto and bring its own currency.
Well all these started in a garage in Bellevue, Washington, on 1994, where Jeffrey Preston Bezos(founder of Amazon) started an online book selling company. And now, Amazon is the largest retailers of any physical goods such as electronics, software, video games, apparel, furniture, food, toys, jewelry and much much more. Not only physical, but also virtual goods like e-books, streaming videos, and web services too.
In 2015, Amazon even surpassed Walmart, the most valuable retailer in the United States by market capitalization. Basically Amazon is like a big shed or a big roof, under which most of the small-medium, offline-online retailers stay.
But the question is, how this online book selling company, which started in a garage, now became one of those tech giant? To understand this, let’s continue…
Why Amazon uses data analytics?
Tell me something, whenever we order something in Amazon, are we ordering from Amazon or through Amazon?
Through Amazon, because in most of the cases these products come from an offline retailer.
Yes, which means, Amazon acts as a bridge here. Right?
Yep!
And when you’re acting like a bridge, you’ve the power to know about both the sides. Isn’t it? Which in case of Amazon, they have both the user data and the seller data. This is where the magic happens.
Whenever we are using the Amazon site to search something or to buy something, it is very important for Amazon to show us the right product as soon as possible. And for this, they must know which kind of products do we like, or we want to buy, even before we are actually going to buy it. This is why Amazon uses data analytics; so that it can understand us, learn what do we like or dislike, and eventually showing the best product for us in the feed.
Wow, that was interesting!
There’s also the seller data, which Amazon use as well. And for that, let’s get to the next section.
How Amazon uses data analytics?
So, we knew that Amazon acts as a bridge between the seller and the buyer. Thus, all the products these seller sales, Amazon has info of all of them. As of March 2021, Amazon has almost 9.7 million sellers worldwide, which means Amazon literally has a goldmine of data.
But how does Amazon use this data?
You know, every year Amazon unveils 100s of products, and here comes the golden strategy of Amazon which easily puts every competitors of Amazon out of business. And if we look at how this is done, it has 3 simple steps:
They find the bestselling product available in the market, use the data from the seller's profile and make a list of all the specs that makes that product a bestselling product.
They read through the reviews of that product, and find out exactly what the customers loves so much about that product.
Then they buy a manufacturing unit to make that exact same product, and finally price it at an aggressive range like 30-40% lesser than that bestselling product.
And this is how without even trial and error, Amazon takes a easy way out to make millions of dollars, by selling product form all categories, thus successfully eliminating the bestseller himself.
All this is done because Amazon has these 3 super powers:
This is what makes the consumer and seller data literally a gold mine for amazon. And this is how Amazon uses the power of data to stay above in the business.
To learn more about this concept of using the buyer-seller data, watch this video: YouTube.
What analytics tools does Amazon use?
To stay up in the business, nowadays it is just impossible without analytical tools. Because first, it’s simply outside human capability and second, it’s a waste of time and effort to remember all these humungous amount of data. So, why not use these artificial brains to remember the data, to do all those complex tasks, and help us to increase our business. And simply that’s the reason why Amazon also uses different analytical tools.
AWS: Amazon Web Services(AWS) is a cloud computing platform provided by Amazon which includes a mixture of infrastructure as a service (IaaS), platform as a service (PaaS) and packaged software as a service (SaaS) all together.
AWS was launched in 2006 by Amazon, to handle its online retail operations. It was one of the first companies to introduce a pay-as-you-go cloud computing model that scales to provide users with compute and storage as needed.
As a public cloud service, AWS has more than 100 services.
Previously, AWS was merged with Machine Learning to do some internal works for Amazon. But later this two are divided into two different segments because of the machine learning part AWS was becoming slower to work with for developers and scientists.
Amazon SageMaker: After being separated from AWS, Amazon built an another platform just for Machine Learning and those kind of stuffs, SageMaker. It helps data scientists and developers to prepare, build, train, and deploy high-quality machine learning (ML) models quickly by bringing together a broad set of capabilities purpose-built for ML.
Amazon Flywheel: Amazon's approach to AI is called a flywheel. It is an approach by Amazon which helps to innovate around machine learning models, and find out which is the one area of the company that fuels the efforts of other teams. More about it in the next section.
The Amazon approach towards Data Analytics
I wanna ask you a question at first, you up for it?
Sure!
Are you a modern marketer?
I'm sorry, I didn't get you?
Okay, let me break it into smaller pieces.
Are you a data-driven marketer?
Are you a marketer who understands which specific features of your marketing technique are attracting the customers again and again?
Are you in complete control of customizing the particular message to that particular audience, across multiple devices and platforms, at a certain point of time?
If the answers are yes, then great, you're a modern marketer; otherwise you might want to look into your marketing techniques and change some stuffs.
Now that we know who we are, let's understand what is the Amazon approach.
See, if we dig deep into Amazons approach towards data, it basically divided into 2 parts:
Customer data collection
People-based marketing
We just talked about the customer data collection part in the "how" & "why" sections. If, still you want to learn more, here it is:
Next comes the people-based marketing. See this is the thing which is making a big difference between the modern marketing techniques to the traditional ones.
What we used to do earlier is we reach out to the customers to show our products whom we don't even knew if interested in our products or not, we show our products and then ask them to buy it. In this process, the sales man already lose the customer, even before he/she has completed their product explanation.
Why?
Because first of all why did that person has come at that time, while I was maybe doing something more important, secondly why would someone come to show me some products which I might not give a damn about. That's why no matter how much good the product was, the conversion rate was very poor.
This is where the people-based marketing comes into play, where the main focus is the customer satisfaction; not the money. While the traditional marketing was completely based on the content, now it is based on the user-experience of the content. The things matter here are: Who we want to reach, what content resonates with them, where we can reach them, how our ideas affected their decisions and subsequent actions.
Wow, It's so interesting!
Yeah dude, it is!.. It's still one of the best marketing case study I've ever read.
So, after having the customer data and that awesome people-based marketing technique, what Amazon does is it visualizes upon the data at a granular level; from a bird's eye perspective. Every customer's buying habits, purchase history, contact and shipping info, frequency, amount of spending - everything is tracked. And thus forms a "360-degree-view" of us; means it is like a copycat of us, but it's an AI who acts and behaves just like us, thus giving Amazon the better understanding of how we actually think, and thus ultimately helping Amazon to customize its contents and recommendations to get more and more sells.
Well, that’s not all. There is something more, and that’s the Flywheel approach by Amazon. If there is only one approach Amazon’s been following since its origin, it’s customer centricity. And to keep that mindset consistent, the strategy Amazon follows is this Flywheel approach.
Wohoo, that is something! But it gone over my head, could you please explain this? 😅
Yeah sure!
So, if I had to explain this Flywheel approach(which Amazon also refers as “virtuous cycle”) in a lay-man term: If the price is less, it will led more customer visits. More customers will then increase the volume of sells and this will attract the commission paying third-party sellers to the site. The more the third-party sellers, the more Amazon gets its fixed price to maintain servers to run the website and to pay other bills. Thus this strategy become super efficient. We can feed any part of the wheel, and the cycle will keep continuing.
You want to learn more about it? Go here Amazon Flywheel.
What makes Amazon different from other companies?
“Till now, I’ve said so much amazing things about Amazon, that I think practically there’s no need of this point, haha” .. that’s what I thought while writing this point; but surprise surprise, there’s more!
If we have to wrap this up, there’s only 3 things, which makes Amazon amazing:
Selection: Large selection of products, so that the customers can find every product they want to buy, and of course, the product should be in stock.
Price: Lower price is like the most important thing for us, the customers. All we want is, to buy any product with the lowest possible value.
Delivery: One of the most important aspect is to get the ordered product as soon as possible, and as usual Amazon is amazing in this sector too!
Well, all these are almost the same stuffs. And you told there’s more?…
Yeah, there is more! Because these 3 were from the customer side. There’s a good side even for the sellers too!
Buy box: This is something which is given to every experienced seller, who have a good record of selling their products on Amazon. What it does is it helps the customer to directly buy a product(the blue box), and also customer can choose any other seller who’s selling the exact same product and buy from them(the red box).
More on this, here.
What fascinates me about Amazon?
I’m an entry level data analyst. I started writing blogs on companies, specifically to learn how these companies leverage the power of data. And for the same reason I also started writing about Amazon.
Honestly speaking, now I’ve become a fan of Amazon. Not only that, now I’m really into marketing too! I mean the way Amazon use the data to market its contents just made me speechless. And these are the reasons why I or anyone should work with Amazon.
That’s it?
Yeah man, that’s it for this one.
Cool, waiting for the next one!
Yeah, please!
Sounds cool, can we help you anyhow?
Yes, you can share this blog with your friends in social media, or just send it to whoever it needs to learn more about how different companies use data analytics or marketing.
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📌 “#30Days30Companies” is a blog project about 30 different companies, where I'm learning and documenting how these companies leverage the power of data, how do they perform data analytics, what is making them different from others, and why I am fascinated to work with them.
See you, in the next one.