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Amazon is facing regulatory issues recently. As business students or future entrepreneurs, we need to understand why Amazon is acquiring these companies. To find an answer we delve into Amazon’s core business philosophy. At Amazon, the customer is the central unit of all analysis. Amazon’s business policy is consistent across all businesses. Amazon focuses on providing customers with merchandise at a low cost and with as much convenience as possible. Amazon has enabled customer-centric business operations and vision through technology and data.
Customers cubes are company-level customer data. In this customers are at the center and all the data within the organization is organized with respect to that customer. The customer cube approach helps amazon capture more and more information about its customers. Customer cubes help Amazon learn more about customer data. Amazon tries to find out where the customer comes from, name, email id, device information, and click stream data. Clickstream data means how often customers log into Amazon, how long each visit of theirs, what are they doing after logging in, and so on.
The third facet is their product catalog behavior. It is about suggesting to the customers the products that will be relevant to them from the collected data. The fourth facet is transactional data. Which tracks the average order value, use of payment modes, which credit cards the customer is using, and so on. The fifth customer facet they track is if the customer is having any issues or problems, reaching out to customer care, what reviews are they sharing, whether they are returning any products, and so on. The sixth facet they track is marketing. Are customers using any discounts, are they landing on the page through some ad campaigns, etc? All this data is tracked by Amazon in the customer cube. Amazon has been making these customer cubes for every customer for the last 25 years.
Amazon keeps learning more about the customer through these customer cubes. Besides, in the quest to learn more about the customer and know what they may potentially buy in the future, Amazon is also acquiring new companies. Such as iRobot. Which is a company manufacturing robotic vacuum cleaners. This is because of the data Amazon can bring about their customers. Amazon has access to all the data about the customers except for the floor space in their homes, how big their homes are, and so on.
iRobot can provide Amazon with data about the floor plan of their customers. Because when someone uses iRobot’s vacuum cleaner they have to enter their floor plan and floor size into the iRobot vacuum software. This is how Amazon can get access to their customer’s floor design and space data. Because of this Amazon now has access to almost all kinds of data about its customers. Not just this but Amazon has also acquired One Medical. Customers provide their medical information when they use this app. As Amazon keeps expanding its customer profiles they are collecting more data and it helps them in the following ways.
First is personalization. Personalized Ads are more effective and they bring relevant products from all across Amazon to the customers who are most likely to buy those products. The second is connecting customers to various services under Amazon using the loyalty programs. No other company’s loyalty program compares with Amazon’s. The third benefit is that Amazon is able to make meaningful acquisitions across a wide range of businesses. At the end of the video, I’ve shared business lessons that we can learn from Amazon’s Business Philosophy and recent acquisitions. Hope you found this video helpful, please let me know what other topics you’d like me to cover in the future.
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Chapters
0:00 - Intro 0:38 - Pointers 1:13 - Amazon Core Philosophy 2:29 - Customer Cube 5:30 - Benefit of iRobot acquisition 6:39 - Personalization 7:22 - Loyalty Programs 8:56 - Wide range of Acquisitions 9:35 - Business Takeaways 10:45 - Outro
