The old-fashioned truth about e-commerce
Amazon.com reports its best holiday season ever, with impressive sales figures. Sadly, what is behind most of those numbers is a rare e-commerce attribute.
Amazon.com the week of Dec. 25 announced sales figures that make the 2006 holiday season its best thus far, including one day (Dec. 11, for those who track such trivia) on which it rang up more than 4 million items sold.
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 corporation 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 while paying for a miniscule fraction of the personnel that a similarly sized brick-and-mortar player would need. That benefit clearly comes with a reduction in the ability to provide customer service, however, and that customer service shortfall has derailed more than its fair share of online storefronts.
Amazon.com has survived, a feat made even more impressive as its sales continue to rise. As for why, consider this tale from a colleague of mine, technology book author James Turner, of 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.
"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-year-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. 10 minutes later, the credit has appeared on the order."
Turner did a quick tally of his reactions and seriously dinged Amazon.com for not shipping the paid-for item and for "trying to gyp me on the refund," but said he felt the company almost made up for it by being so responsive on a holiday morning, for admitting its mistake, for reversing its decision (albeit after a customer challenge) and for a very quick refund.
What's fascinating about this tale is that it shows Amazon.com flexing its technology muscle well—that quick refund is a trick few large retailers could do so easily—but also using personnel to make right the glitches arising from its software.
On various occasions, I have found Amazon.com's customer service people to be unusually responsive and helpful, 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.com holiday claims for this year. (Amazon.com shareholders should probably ask how much time someone on the 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.
The company actually sold a $20,000 MP3 player, cast in 750 (18-karat) gold and set with 63 1-carat diamonds. The last Prime order placed in time for Christmas delivery contained a Bogen-Manfrotto Classic Tripod (Silver) delivered to Norman, Okla. on Dec. 23. Top-selling toys were Radica 20 Questions, Laugh & Learn Cuddly Learning Puppy and Princess Genevieve Doll - Barbie in the 12 Dancing Princesses. Top-selling kitchen items included the Matfer Exopat Nonstick Baking/Roasting Sheet, Santa Fe Quesadilla Maker and Calphalon's Commercial Hard-Anodized 12-Inch 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), top-selling software (World of Warcraft Expansion: Burning Crusade) and top-selling shoe (Nine West Women's Ealene Boot). Should I even ask who buys shoes online? Guess somebody does.
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