Business owners often look to Amazon for inspiration to success. The commerce and cloud computing giant’s profits rise every year, with 2017 seeing net sales revenue of over 177 billion.
Amazon’s savvy across a variety of fields, from its grasp of data-driven decision-making to effective customer service, makes it a common source of inspiration for entrepreneurs.
If you want your company to be like Amazon, here are some tips you can use:
Use data for personalization
A big reason for Amazon’s continuous growth and success is its embrace of data. Specifically, Amazon uses troves of data from its more than 150 million customer accounts to fuel recommendation systems. Dating back to 2003, Amazon was using item-for-item recommendations, evolving today into a more refined system with extremely customized results.
In addition to providing customized personalization systems that help drive sales and clear lingering inventory, data helps Amazon provide one of the highest-ranked customer service experiences. Amazon’s customer service acclaim is partly from its embrace of available data, placing customer service professionals in an immediate position to remedy issues.
Customers often depart an interaction with satisfaction, comparative to some other businesses, where a customer-first result is difficult to obtain. Amazon combines relevant data with acknowledgment of its errors, making customers feel valued.
Regardless of their size, businesses should strive to make datasets manageable by consolidating sources into one environment, instead of working with various platforms. Merging in-house, second-party and third-party data into one central hub can make the process more efficient.
Manage items and inventory instantaneously
Not every company has over 1 billion items in their inventory, though they can still learn from Amazon regarding item tracking and management. Regardless of size, businesses can take a cue from Amazon in their usage of S3, an interface that can store and utilize any amount of data at any time. Amazon utilizes S3 for millions of updates regarding inventory, updating about every 30 minutes to ensure comprehensive accuracy.
For any business selling products, informing customers accurately regarding an item’s in-stock status is pivotal to providing a confident consumer experience.
Embrace local opportunities
It’s no secret that young buyers, and many buyers in general, prefer to shop locally. Cater to this preference by offering locally made products, even if you’re effectively the middleman, as Amazon is to third-party sellers that also do business on Amazon. If selling local products is not feasible, as it isn’t for Amazon, then relying on third parties and relevant partnerships is a savvy way to corner the local market without investing significant resources in specific locales.
Minimize additional fees
One of the most appealing aspects of Amazon is that additional costs are rare. Aside from tax, the price customers see is what they get. Compare that to other platforms that may charge service fees or other odd charges.
Amazon also bypasses the shipping costs in many cases by offering free shipping when orders are $25 or more. Although providing free shipping can be an initial cost for businesses, Amazon can certainly tell you that the costs are worth the influx of customers it receives. Although providing free shipping may be costly in the short term, it pays for itself in the long term, as Amazon founder Jeff Bezos knows.
On the aspect of shipping, businesses can also learn from Amazon in negotiating with shipping providers based on the location the customer orders from.
Offer monthly and yearly plans
Amazon’s Prime feature is an excellent example of offering plans to customers to incentivize loyalty. Specifically, Prime offers free two-day shipping, access to Amazon’s video streaming service, free access to select e-books and discount opportunities, all for the price of $12.99 per month or $99 yearly.
Although some extremely active Prime users may cost Amazon more because of the program, there’s still ample benefit to the program on a large scale. Amazon Prime does generate profit from many customers, while also providing a fantastic form of press in being one of the few e-commerce retail giants to offer free two-day shipping and an abundance of media options that rival Netflix in content and quality.
Experiment and analyze the results
Amazon is no stranger to failure, despite its massive success. Amazon’s initial role as a discount internet bookseller in 1995 was not indicative of later success. Other endeavors, such as the Amazon Fire phone and Amazon Destinations, saw the company unsuccessfully attempt to enter additional industries, such as the smartphone and travel industry, respectively.
Despite the failures of these initiatives, Amazon’s knack for acquiring knowledge from failure places it in a better position to succeed in the future. Some experiments flop, though they can always provide insight into a savvy company like Amazon, which succeeds by utilizing lessons from these failures.
Amazon is a great source for entrepreneurs and emerging businesses to regard as they seek to grow and succeed. From Amazon’s use of data to its embrace of experimentation, there’s plenty to learn from the e-commerce giant.
Nathan Sykes is the editor of Finding an Outlet, where he writes about the latest in technology and business. Be sure to follow Nathan on Twitter @nathansykestech.