In 2012, Jeff Bezos, Founder and CEO of Amazon.com, announced
“I’m happy to report that Amazon has been rated #1 in the National Retail Federation Customers’ Choice Awards…”
Forbes announced the Customer’s Choice Award recipients for the NRF Foundation, and beating out competition from a sector apart from its own, Amazon.com came in first place. These awards recognize retailers that provide the best customer service, amongst companies including Nordstrom, Kohl’s, JC Penney, L.L. Bean, Target, QVC, and Zappos.com.
“Customer service” has typically been described as the face-to-face interactions between employees and customers: “greeting customers, providing customers with product information, demonstrations, additional options or size assistance; suggesting add-ons or complementary products…” (Goodfellow 2012) Interestingly enough, Amazon.com trumped the competition despite the fact that its services include no face-to-face interaction. All traditional, physical stores, which have the advantage of human interaction, lost to Amazon.com. Stores that have the opportunity to “schmooze” with customers – to compliment them, to verbally advise them, to read their facial expressions and react appropriately – a skill that was once portrayed as profitable and useful within sales, lost to a website.
Some of the phrases that consumers used to justify their nominations for Amazon in the Customer’s Choice awards included:
· Efficient
· Fast
· Reliable
· No hassle
· Easy
· Free shipping
These terms vary greatly from the phrases used in nominating Nordstrom, which include:
· Friendly
· Personal
· Knowledgeable
What does this mean about today’s definition of “service”? Is the ideal design of our shopping experience changing? How did Amazon acquire this trust and loyalty with customers?
Amazon Prime
What is Amazon Prime?
Amazon Prime is Amazon’s well-known shipping service. For a flat fee of $79/year (changing to $99/year within the next month), Amazon users get 2-day shipping on all items shipped from Amazon’s warehouse for no minimum order size, unlimited instant streaming of thousands of movies and TV shows with prime Instant Video and free monthly books through Kindle First and the Kindle Owners Lending Library[1]
Additionally, Amazon offers a 30-day free trial for Amazon Prime, or a 6-month free trial for students. Upon Amazon Prime’s Free Trial completion, users’ Amazon Prime accounts are automatically renewed, charging the customer for a year-membership.
Amazon Prime’s Role in Amazon’s Success
Amazon Prime undoubtedly plays a huge factor in the success of Amazon’s customer service. In fact, it boosts customer spending at Amazon dramatically; analysts say Prime members increase their purchases on the site by about 150 percent after they join and may be responsible for as much as 20 percent of Amazon's overall sales in the U.S.[2] Memberships have doubled in less than two years, and analysts predict that Amazon Prime memberships will easily double again by 2017. Furthermore, a report from Morningstar and Consumer Intelligence Research Partners (CIRP) estimated that there are now 10 million subscribers to Amazon Prime. [3]
Amazon Prime largely attracts the college-student market. In fact, within a 76 person poll amongst Stanford University undergraduate students, when asked “Why do you choose Amazon.com over other websites?” 69 responded, “Amazon Prime”. Amazon has greatly attracted university students, whom, typically, live a busy day-to-day life where leaving campus is atypical due to inaccessibility to cars and the general college culture. When asked why students choose Amazon/Amazon Prime over driving to a physical retail store, over 70% of responses were comparable to:
I don’t have a car.
It takes me more than 2 days to get access to someone else’s car.
Most of my orders are for items that I don’t need during the next 2 days, so I might as well save the time of going to a store and order using Amazon Prime.
Amazon appeals to the quick-shopper, which everyone is becoming. Quite obviously, 2-day delivery is, as Amazon puts it, prime.
Not only is Amazon Prime so advantageous because of its quick delivery, but also because of its seemingly free shipping. Interestingly enough, Amazon labels its Amazon Prime shipping offer as “FREE 2-day shipping” (as shown below). Consequently, most users refer to its shipping as free. Within the 76-student poll described above, when asked to describe Amazon Prime, over 80% of participants responded, “free 2 day shipping” – Amazon’s delivery option (written multiple times on its site) must be a catchy phrase!
“I’m happy to report that Amazon has been rated #1 in the National Retail Federation Customers’ Choice Awards…”
Forbes announced the Customer’s Choice Award recipients for the NRF Foundation, and beating out competition from a sector apart from its own, Amazon.com came in first place. These awards recognize retailers that provide the best customer service, amongst companies including Nordstrom, Kohl’s, JC Penney, L.L. Bean, Target, QVC, and Zappos.com.
“Customer service” has typically been described as the face-to-face interactions between employees and customers: “greeting customers, providing customers with product information, demonstrations, additional options or size assistance; suggesting add-ons or complementary products…” (Goodfellow 2012) Interestingly enough, Amazon.com trumped the competition despite the fact that its services include no face-to-face interaction. All traditional, physical stores, which have the advantage of human interaction, lost to Amazon.com. Stores that have the opportunity to “schmooze” with customers – to compliment them, to verbally advise them, to read their facial expressions and react appropriately – a skill that was once portrayed as profitable and useful within sales, lost to a website.
Some of the phrases that consumers used to justify their nominations for Amazon in the Customer’s Choice awards included:
· Efficient
· Fast
· Reliable
· No hassle
· Easy
· Free shipping
These terms vary greatly from the phrases used in nominating Nordstrom, which include:
· Friendly
· Personal
· Knowledgeable
What does this mean about today’s definition of “service”? Is the ideal design of our shopping experience changing? How did Amazon acquire this trust and loyalty with customers?
Amazon Prime
What is Amazon Prime?
Amazon Prime is Amazon’s well-known shipping service. For a flat fee of $79/year (changing to $99/year within the next month), Amazon users get 2-day shipping on all items shipped from Amazon’s warehouse for no minimum order size, unlimited instant streaming of thousands of movies and TV shows with prime Instant Video and free monthly books through Kindle First and the Kindle Owners Lending Library[1]
Additionally, Amazon offers a 30-day free trial for Amazon Prime, or a 6-month free trial for students. Upon Amazon Prime’s Free Trial completion, users’ Amazon Prime accounts are automatically renewed, charging the customer for a year-membership.
Amazon Prime’s Role in Amazon’s Success
Amazon Prime undoubtedly plays a huge factor in the success of Amazon’s customer service. In fact, it boosts customer spending at Amazon dramatically; analysts say Prime members increase their purchases on the site by about 150 percent after they join and may be responsible for as much as 20 percent of Amazon's overall sales in the U.S.[2] Memberships have doubled in less than two years, and analysts predict that Amazon Prime memberships will easily double again by 2017. Furthermore, a report from Morningstar and Consumer Intelligence Research Partners (CIRP) estimated that there are now 10 million subscribers to Amazon Prime. [3]
Amazon Prime largely attracts the college-student market. In fact, within a 76 person poll amongst Stanford University undergraduate students, when asked “Why do you choose Amazon.com over other websites?” 69 responded, “Amazon Prime”. Amazon has greatly attracted university students, whom, typically, live a busy day-to-day life where leaving campus is atypical due to inaccessibility to cars and the general college culture. When asked why students choose Amazon/Amazon Prime over driving to a physical retail store, over 70% of responses were comparable to:
I don’t have a car.
It takes me more than 2 days to get access to someone else’s car.
Most of my orders are for items that I don’t need during the next 2 days, so I might as well save the time of going to a store and order using Amazon Prime.
Amazon appeals to the quick-shopper, which everyone is becoming. Quite obviously, 2-day delivery is, as Amazon puts it, prime.
Not only is Amazon Prime so advantageous because of its quick delivery, but also because of its seemingly free shipping. Interestingly enough, Amazon labels its Amazon Prime shipping offer as “FREE 2-day shipping” (as shown below). Consequently, most users refer to its shipping as free. Within the 76-student poll described above, when asked to describe Amazon Prime, over 80% of participants responded, “free 2 day shipping” – Amazon’s delivery option (written multiple times on its site) must be a catchy phrase!
However, with its $79/year (soon-to-be $99/year) membership fee, shipping is not exactly “FREE”. In fact, a 2011 investigation estimated and reported that the average Amazon Prime member uses $55 worth of shipping and $35 in digital content annually[3] (both included in the Amazon Prime membership for no additional cost), totaling $90. In which case, the average customer only benefits $11 annually (which does not equate to an $11 loss for Amazon), and with Amazon’s new membership fee of $99/year, users will actually be losing money in shipping/digital media costs or, which is more likely, users will purchase more products from Amazon.
This was an incredibly manipulative shipping design tactic for Amazon being that Amazon already offers free shipping for orders with value greater than $25[2]. Interestingly enough, simply indicating that all orders would be free (many of which would have already been free without the Amazon Prime membership) gained the attention of users.
Promoting Amazon Prime – Amazon’s Design Tactics
Nearly one third of Amazon’s main homepage (the initial homepage without having to scroll) is a direct marketing tool for Amazon Prime. Five sections are devoted to prime (see image below).
This was an incredibly manipulative shipping design tactic for Amazon being that Amazon already offers free shipping for orders with value greater than $25[2]. Interestingly enough, simply indicating that all orders would be free (many of which would have already been free without the Amazon Prime membership) gained the attention of users.
Promoting Amazon Prime – Amazon’s Design Tactics
Nearly one third of Amazon’s main homepage (the initial homepage without having to scroll) is a direct marketing tool for Amazon Prime. Five sections are devoted to prime (see image below).
In fact, its logo has changed; rather than the simple “amazon” with an orange arrow beneath it, the logo now includes a hyperlink, “Try Prime”. Amazon Prime has become the face of this online retail shop.
[1] "Amazon.com: Online Shopping for Electronics, Apparel, Computers, Books, DVDs & More." Amazon.com: Online Shopping for Electronics, Apparel, Computers, Books, DVDs & More. N.p., n.d. Web.
[2] Stone, Brad. "What's in Amazon's Box? Instant Gratification." Bloomberg Business Week. Bloomberg, 24 Nov. 2010. Web.
[3] Tuttle, Brad. "Amazon Prime: Bigger, More Powerful, More Profitable than Anyone Imagined Read More: How Amazon Prime Became More Successful than Anyone Imagined." Time Magazine 18 Mar. 2013: n. pag. Web.
[2] Stone, Brad. "What's in Amazon's Box? Instant Gratification." Bloomberg Business Week. Bloomberg, 24 Nov. 2010. Web.
[3] Tuttle, Brad. "Amazon Prime: Bigger, More Powerful, More Profitable than Anyone Imagined Read More: How Amazon Prime Became More Successful than Anyone Imagined." Time Magazine 18 Mar. 2013: n. pag. Web.