Amazon Learns The Old-Fashioned Truth About E-Commerce

Written by Evan Schuman
November 27th, 2006

Reporting its best holiday season ever, is touting impressive sales figures, but what is behind most of those numbers is good old-fashioned delivering on promises. Sadly, that’s a rare E-Commerce attribute. this week touted sales figures that make the 2006 holiday season its best, with one day (it was Dec. 11th, for those who track such trivia) ringing up more than 4 million items.

The company also boasted of some impressive speed sales, such as selling 1,000 Xbox 360s in 29 seconds and 1,000 Axion DVD players in 34 seconds. (Note to marketers: Add more Xs in your brand names.)

But behind the numbers lies a more interesting tale.

Large brick-and-mortar retailers have often survived scalability challenges because they had store managers with lots of discretion. No matter what bizarre stock problems that corporate experienced, managers had the tools of store credit, refunds and sympathetic words to try and hold the ship together.

But an E-Commerce retailer of equal size rarely has such luxuries. The attraction of E-Commerce is the ability to potentially move tens of millions of SKUs with paying for a miniscule fraction of the personnel that a similarly-sized brick-and-mortar player would need. That benefit clearly comes with a cost and that customer service cost has derailed more than its fair share of online storefronts.

Amazon has survived, a feat made even more impressive as its sales continue to rise. As for why, consider this tale experienced by a colleague of mine, technology book author James Turner, on Christmas morning: “My 11-year-old is unpacking his Lego Mindstorm and suddenly asks me for batteries. ‘Hmm,’ I think to myself. ‘I’m positive I bought the version with the rechargeable battery pack.’ I fetch my kid some rechargeable AAs from my huge pile I keep precharged upstairs and check my Amazon order. Yep, sure enough, ‘Lego Mindstorms NXT With Free Battery Pack.’ So I use their handy ‘Call me right now’ feature and, 30 seconds later …. on Christmas morning no less …. I’m talking to someone.”

His tale continues: “After a few minutes of ‘Yes, I’m who I claim to be,’ he checks and informs me that they screwed up, they have none in stock, and the best they can do is either have me ship the whole thing back and refund me?not likely, because of the aforementioned 11 yr old?or give me a credit to make up for it. ‘How much of a credit?’ I ask. ‘A $25 credit.’ I had already checked and the battery pack and charger go for $73. ‘You’re offering to give me $25 for $73 worth of missing merchandise?’ He asks me to wait a minute, comes back and offers to credit me $73. I agree, ordering the battery pack from Lego as we talk. Ten minutes later, the credit has appeared on the order.”

Turner did a quick emotional tally and seriously dinged for not shipping the paid-for item and for “trying to gyp me on the refund,” but they almost made up for it by being so responsive on a holiday morning, for admitting their mistake, reversing themselves (albeit after a customer challenge) and for a very quick refund.

What’s fascinating about this tale is that it shows Amazon flexing its technology muscle well?that quick refund is a trick few large retailers could do so easily?but mostly using personnel to make right the glitches from its software.

On various occasions, I have seen Amazon’s customer service people to be unusually responsive and helpful, committing the apparent sin of actually listening to the customer’s question and trying to keep everyone happy.

With that in mind, let’s look at some of the wonderfully trivial Amazon holiday claims for this year. (Amazon shareholders should probably ask how much time someone on the Amazon payroll took to compile this list). The company announced that “one of Amazon’s most remote shipments” was a copy of Mission Impossible?the Complete First season that went to Wainwright, Alaska.

It actually sold a $20,000 MP3 player, which is cast in 750 gold (18 karat) with 63 diamonds (one-karat). The last Prime order placed in time for Christmas delivery contained a Bogen-Manfrotto Classic Tripod (Silver) delivered to Norman, Oklahoma on December 23rd. Its top-selling toys were Radica 20 Questions, Laugh & Learn Cuddly Learning Puppy and Princess Genevieve Doll ? Barbie In the 12 Dancing Princesses. The top-selling Kitchen items included the Matfer Exopat Nonstick Baking/Roasting Sheet, Santa Fe Quesadilla Maker and Calphalon?s Commercial Hard-Anodized 12-in Everyday Pan.

The retailer announced lots of other trivia, too, including top music sold (Awake by Josh Groban), top book sold (Big surprise: it was a diet book), most software sold (World of Warcraft Expansion: Burning Crusade) and the top-selling shoe (Nine West Women?s Ealene Boot). Should I even ask who buys shoes online? Guess somebody does.


One Comment | Read Amazon Learns The Old-Fashioned Truth About E-Commerce

  1. David Howell Says:

    Great article about AMAZON!

    Quick additional commentary: I ordered items from Amazon and Barnes and Noble on the same day around the same time. Both packages shipped from the East Coast and were \”supposed\” to arrive before Christmas. As it turned out, a major storm got in the way and the delay caused both packages to be delivered on the 26th.

    When I realized that delivery by Christmas was unlikely, I expressed my dismay to both companies (UPS advised me to contact the shipper to address any tracking issues–go figure!–) in nearly identical e-mails (they were the same except for order numbers, etc.)

    Well, Amazon expressed it\’s regrets and sent me a $5 promotional credit as a consolation. Barnes & Noble sent me a message saying, in effect \”Sorry, man, it\’s not our fault!\”

    Guess who I\’m going to buy from in the future? Not B&N!!! Amazon is doing it right. B&N doesn\’t even have a CLUE! The fact is, the ONLY reason I shop at B&N at ALL is because of the B&N gift cards that come my way once in a while. B&N can\’t even compete on price. Wouldn\’t you think they\’d at least TRY to compete on service?


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