E-Marketing and Radio Frequency Identification Tools and Techniques for Amazon-Com - Case Study Example

E-marketing and Radio Frequency Identification (RFID) tools and techniques for Amazon.com Grade (April 19th,2014) Table of Contents E-marketing and Radio Frequency Identification (RFID) tools and techniques for Amazon.com Executive summary Amazon.com was founded in 1994, but the company remained unprofitable until 2001 (Weeks, 2002:139). The company has been historically recognized for its efficiency in both e-mail marketing and in delivery of products to the customers. Through these efficiencies, the company has managed to accumulate over 30 million customers globally (Hexton, 2013:n.p.). Further, the company has applied the dynamic Homepage and user-interface outlook to attract and retain a wide customer base. Nevertheless, the company is less aggressive in social media marketing. Amazon.com also applies the urgency concept to specify the last date that a customer can place an order, making the customers hurry to purchase the item (Hexton, 2013:n.p.). Nevertheless, despite the advantages offered by Radio Frequency Identification (RFID) in tracking and identifying stock for many businesses, Amazon.com has only utilized the Radio Frequency Identification (RFID) in a very limited manner (Roberti, 2012:n.p.). Therefore, the applications of (RFID), and the increased social media promotion aggressiveness, are some of the main strategies that can help Amazon realize enhanced customer value delivery. How the Amazon’s business and/or supply chain management practices have utilized the tools and techniques? E-marketing According to the Customer relationship management Theory (CRM), technology is a highly effective tool for an organization to interact with both current and future customers (Piskar & Faganel, 2009:202). In this respect, the most effective strategy that Amazon.com has been able to apply as an effective E-marketing strategy is the E-mail marketing (Halligan, 2011:n.p.). E-marketing refers to the tool applied by businesses to acquire, to convert and sustains an audience with their customers, through using technological tools (Lee, 2013:n.p.). Amazon.com is a company that has managed to be very effective in this strategy, considering that it has been ranked amongst the top organization in digital marketing efficiency (Orkiszewski, 2005:204). To be effective in the application of E-marketing as the strategy for acquiring and retaining contact with its customer base, Amazon.con has applied various strategies. Amazon.com has extensively applied E-mail marketing as the major drive for real revenue generation. To achieve this, Amazon.com has applied specificity as the major E-mail marketing strategy, by avoiding a single standardized e-mail for its customers, as is always the case with many businesses. Rather, Amazon.com has adopted the strategy of writing a specific e-mail for its customers depending on the customers’ needs, thus managing to capture, sustain and convert its customers into a huge loyal customer base (Van Ullen & Germain, 2002:319). Secondly, according to the Customer Relationship Management (CRM) Theory, the dynamism and new improvements in a business product and presentation forms a fundamental basis for customer attraction and retention (Piskar & Faganel, 2009:207). Thus, in reference to this, the dynamic Homepage and user-interface outlook is another E-marketing strategy that has been applied by Amazon.com to attract and retain a wide customer base (Hexton, 2013:n.p.). This is because, customers always want to see dynamism and change in the mode of operation of a business, where the business is constantly presenting new products, ideas, services and appearances (Hines, 2004:22). In this respect, Amazon.com has been able to capture the interest of the customers through ensuring to offer a personalized homepage for its customers’, with constantly new outlook and new information for the customer that seeks to meet the customer needs. To realize this strategy, Amazon.com constantly monitors the needs of the customers through tracking what the customer routinely search in its website, and then responds by informing the customer the new arrivals in the customer preference category (Thompson & Clark, 2006:31). Thus, the Amazon.com personalized home page is constantly giving the customers new information such as ‘New for you’, ‘This you need to consider’ or recommended for you (Hexton, 2013:n.p.). According to the Quick response model of management, reducing the product lead time is essential for enhancing sales and profitability for a business (Suri, 2010:25). Thus, the concept of urgency is another strategy that is applied by Amazon.com to acquire and retain a loyal customer base. The urgency technique is applied through the quick response to the customer requests, which makes the customers feel appreciated and valued (Mcdonald, 2012:n.p.). Further, to enhance the urgency of addressing the customer’s needs, Amazon.com applies a very clever strategy, where it does not only furnish the customer with information regarding the tentative duration a delivery is likely to take, but rather specifies the days, hours and time for such a delivery (Hexton, 2013:n.p.). In this respect, customers get fully confident in the Amazon.com services, and thus become part of a loyal and repeat customer community. In addition, Amazon.com also specifies the last date that a customer can place an order with further specific details of the day, hours and time remaining, which serves to show the customers the urgency for purchasing the item (Hexton, 2013:n.p). This makes the customer to order appropriately, so they may not miss out on the item, thus creating a high rate of stock turnover, thus a highly efficient E-marketing strategy. Radio Frequency Identification (RFID) The theory of constraints (TOC) provides that a business organization is restricted from achieving its goals by a limited number of constraints (Stein, 1997:72). In this respect, product tracking and identification is the major constraint facing Amazon.com, due to the millions of products that the company handles on a daily basis (Mudambi & Schuff, 2010:187). Therefore, the company requires an efficient system of tracking and identifying its stock, but it has only utilized the Radio Frequency Identification (RFID) in a very limited manner. Radio Frequency Identification (RFID) entails reading of the tags attached to products, as a system of streamlining the supply and marketing chain for a business, through enhancing real-time tracking and identification of the location of the product (Shepard, 2005:27). In addition to this strategy being applied for creating efficiency in the supply chain, RFID increases stock security through the creation of the ability to track all stock items for the business in real time, while also saving in the costs associated with manual tracking and identification of stock (Nekoogar, 2011:44). Amazon.com is a company that has managed to apply RFID in tracking and identifying its stock, though in a very different manner from the normal manner that is applied by businesses. While most businesses apply RFID to track their products through attaching tags on the products which are then used to track and identify the location of the product, Amazon.com has a system of locating goods based on the shelf identification, as opposed to product identification (Roberti, 2012:n.p.). Thus, the products are received and placed on the available free shelf without paying attention to a certain pattern of arranging the goods, but the shelf where the product is placed is then given a barcode for identification (Roberti, 2012:n.p.). Therefore, when the products needs to be retrieved for sending g to the customers, the Amazon.com staff just walks to the identified shelf were the product was placed, searches for the product, and then prepares it for sending to the customer. In this respect, Amazon.com avoids the process of tagging every product with a barcode tag for the purpose of specific product identification. Therefore, the Radio Frequency Identification tool is an essential part of the Amazon.com supply chain management, only that it has been applied differently, as a means of saving the time and labour costs that would be involved in attaching a tag to every product (Dodani, 2005:875). This strategy further serves to improve the supply chain management of the company, through making it economical. Nevertheless, this unique application of the Radio Frequency Identification has made the Amazon.com system of retrieval more manual and cumbersome for the staff (Bernton & Kelleher, 2012:n.p.). What new opportunities there have been for the organisation to develop their use of these tools and techniques to create additional customer value? E-marketing According to the Institutional theory of marketing, the beliefs, attitudes and culture of an organization has a large bearing on the customer acquisition and sustenance abilities (Hines, 2004:22). Therefore, while the E-marketing strategies applied by Amazon.com have been very effective in attracting and sustaining a loyal customer base, there is more that needs to be done, in order to make the E-marketing tool more productive. First, the efficiency of Amazon.com in delivery of products makes it more preferable amongst the customers, since the process of ordering and receiving the products is highly effective (Meng, 2008:374). Therefore, the company has been able to build a culture of efficient delivery. Nevertheless, the company can improve on its E-marketing strategy, especially on the E-mail marketing, through including more promotional offers, such as discounts and low price offering (Lee, 2013:n.p). This can enhance the ability of the company to build on the E-mail marketing strategy that has been productively applied by the company, through making the customers always eager to look out for the next possible offer on their emails from Amazon.com. Thus, the customers will become highly interested in the company’s emails sent to their mails, even when they are not seeking information regarding purchasing a given product (Halligan, 2011:n.p.). Therefore, by increasing offers and low-price deals for the customers in its E-marketing tool, Amazon.com marketing will become highly effective and more attractive to the customers, making it easier for the company to acquire, convert and sustain a large customer base. Further, the game theory of marketing provides that businesses are rational maximizing entities, which constantly strive to achieve the most preferred outcome, subject to the existing constraints that are also faced by their competitors (Halldorsson, 2007:296). Thus, there is a recent wave of competition for online efficiency that has seen Wal-Mart and E-bay join in the competition for the efficiency model applied by Amazon.com in its supply management chain, where the customers’ orders are processed and delivered efficiently (Mudambi & Schuff, 2010:188). Therefore, considering that efficiency alone is not sufficient to make Amazon.com fully competitive, Amazon.com should apply the game theory of marketing, by rationally maximizing on the other strategies that have been heavily employed by its competitors, such as aggressive social media campaigns for marketing the company and its products, since this is the segment where Amazon.com has lagged behind its rivals (Dussert, 2013:n.p.). By so doing, Amazon.com will capitalize on both the efficiently and robust social media competitive advantages, thus enhancing its E-marketing tool performance, for further business growth and profitability. Radio Frequency Identification (RFID) The Inventory Management Theory provides that an effective stock management system for an organization should be lean; to effectively save on the time and resource costs involved the management of bulk stock (Hines, 2004:36). Therefore, the Radio Frequency Identification (RFID) is one of the main strategies that can help in the realization of effective cost and resource utilization in stock management, since it enables the placement of stock, its tracking and identification in a more timely and economical manner, thus saving on the costs (Lee, 2013:n.p.). Nevertheless, the Amazon.com has not completely adapted this tool, since it only identifies the shelves where the products are kept using the barcode system, but has not used the electronic tags to identify individual products, thus increasing the time consumed in manually tracking and retrieving the products (Cadwalladr, 2013:n.p.). This challenge can be overcome through the full adoption of the Radio Frequency Identification (RFID) by Amazon.com, which will in turn make the stock management more economical both by saving on the time and labour associated with manual retrieval (Bernton & Kelleher, 2012:n.p.). This way, the organization will be more productive. Assess the strengths and weakness of the organisations current use these tools and techniques to support the organisations overall business offering. E-marketing The major strength associated with the use of E-marketing by Amazon.com is that the company has managed to attract and retain a loyal customer base globally, to a tune of over 30 million Amazon.com site users (Hexton, 2013:n.p). Therefore, the company has been able to largely capitalize on the application of the E-marketing tool, most especially the E-mail marketing, dynamic site outlook and urgency concept advertising as the fundamental basis of sustaining a high level of customer interaction (Van Ullen & Germain, 2002:317). However, the major weaknesses associated with the Amazon.con application of the E-marketing tool is that, the company has not been able to incorporate a high level of offers in its E-mail marketing. In addition, another a major weakness of Amazon.com in the application of E-marketing tool largely stems from a less vigorous social media campaign presence, which gives its rivals an edge in social media marketing (Mcdonald, 2012:n.p.). Radio Frequency Identification (RFID) The major strength associated with the limited application of Radio Frequency Identification (RFID) tool by Amazon.com is that, it has reduced the costs associated with applying the electronic tags to all its products, which would consume more time and resources (Bernton & Kelleher, 2012:n.p.). However, the major weakness associated with the Amazon.com application of the Radio Frequency Identification (RFID) tool is that, it has resulted in a more manual system of retrieving products by the Amazon.com staff, thus increasing on the time and labour costs (Cadwalladr, 2013:n.p.). Suggest improvements that could be used to create greater customer value or to help differentiate the organization from its competitors. Justify any proposals. The major improvement that can be implemented by Amazon.com is the increased social media aggressiveness. This action will ensure that Amazon.com takes advantage of the social media platforms to reach its customers whom it has not been able to reach through direct E-mails (Davies, 2011:n.p.). This way, it will be possible for Amazon.com to become more competitive compared to its major retail rivals namely Wal-Mart and E-bay, since the Amazon.com already has an upper hand in efficient product delivery system. Therefore, combining the efficiency delivery and the strong social media presence will give Amazon.com a competitive edge over its main rivals (Chaffey, 2012:n.p.). The other recommended improvement for Amazon.com is the full adoption of the Radio Frequency Identification (RFID). This action will help to save on the time and labour costs involved in the identification and tracking of the stock by the company, effectively increasing its efficiency, performance and productivity (Chaffey, 2012:n.p.). References Bernton, B. & Kelleher, S. 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Appendix A Short case description Amazon.com was founded in 1994, but the company remained unprofitable until 2001 (Hexton, 2013:n.p.). Currently, the company does not only serve as an online retail store, but it is also generating revenues from its Amazon Web Services (AWS) (Thompson & Clark, 2006:30). Amazon.com is famous for its efficiency in the delivery of products to customers, and also for its ability to apply e-mail marketing as its major marketing strategy, which has enable the company to accumulate over 30 million customers globally. These efficiencies have seen the company emerge as the world’s leading online retailer, earning over $2 billion in profits annually (Hexton, 2013:n.p.). Therefore, this case seeks to analyze the application of E-marketing and Radio Frequency Identification (RFID) by Amazon.com as relevant tools for delivering enhanced customer value. While one E-marketing will serve as an example of an upstream facing tool for enhancing customer value applied by Amazon.com, a Radio Frequency Identification (RFID) will serve as an example of downstream facing tool that is applied by the company. Read More