rmediaries (Sarkar et al, 1996.) They are an electronic-commerce only intermediary; business and customer relationship management (CRM) is conducted purely via their website; a virtual marketplace with no direct contact between buyers and sellers. Amazon have created a virtualized value system through their accelerated ordering, delivery and payment of goods and services, while reducing operating and inventory costs associated with traditional bricks and mortar stores. They have access to global markets, economies of scale and the ability to personalize. As a virtual merchant, their products are suited to the Internet, their business models remain a source of differentiation. Amazon is a seller-controlled site whose commercial mechanism is fixed price sales.
Timmers (1998) classifies Amazons business model as a virtual community, which "helps build customer loyalty and trust through an interplay of virtual and physical realities." (Hagel and Armstrong, 1997.) Amazon strengthens their association as a virtual store with "shopping trolley technology" (Cooke, 1997.) Shopping carts and checkouts act as reminders of physical environments. (Weick, 1995.)
Amazons effectiveness as a virtual community is evident with their customer co-presence. "Amazon has made customer relations the centerpiece of its strategy." (Hagel and Armstrong, 1997.) Collaborative filtering helps them achieve personalization and mass customization. Customer extension is offered via their site and e-mails.
Amazons business model is now considerably more flexible as it has diversified from books and CDs to a range of products more typical of a department store. (Chaffey, 2004.) Amazon has warehouses to support their technical innovations. They are dependent on the publisher-to-wholesaler supply chain. Their distribution centers are placed near distribution warehouses to allow quick turn around on deliveries. (Bayers, 1999.)
Amazons brand has enabled them to pursue differentiation strategy