4. The perspective of Amazon.com

 

Amazon.com Inc. was incorporated in 1994 in Seattle, Washington, and since its “[…] opening for business as the ‘Earth’s Biggest Bookstore’ in July 1995, Amazon.com has become one of the most widely known, used and cited commerce sites in the World Wide Web (WWW)” (Gurbaxani / Shrikande, 1999, 1). Because it brought online-marketing and retailing to a new level it was called the ‘Wal-mart of the Internet’ (Gurbaxani/Shrikande, 1999, 1). Starting on the US Market with the online retailing of books and CDs, Amazon.com has become a global brand with online stores available in English (for Canada, USA and Great-Britain), Spanish (for the USA, Spain and South-America), French, Japanese and German (for Austria, Switzerland and Germany). The brand status of Amazon.com is now so valuable that it is placed in the Top Ten of companies with the highest ‘brand-value’ (see Tybout / Carpenter, 2001, 76).[21]

As it Gurbaxani / Shrikande figure out: “The principal competitive factors in Amazon.com’s market are brand recognition and customer focus” (Gurbaxani / Shrikande, 1999, 8). Both qualities are also visible in the customer reviews, because it is one strong part of the Amazon.com brand and embodies the customer-centric corporate philosophy of Amazon.com. In this chapter I will try to show what meanings the customer reviews can have, beyond this mentioned link between brand and corporate philosophy (a point which I will also further describe in chapter 4.2.). Now using the perspective of Amazon.com, the customer reviews play important roles in the realms of service, public relations and the process of brand loyalty, which I will analyse in the following chapters.

 

 

4.1. Service meaning

 

One thing in describing the qualities of customer reviews is so trivial, that you can easily overlook it, what happens in a few descriptions of this phenomenon: Customer reviews fill the blank space of the web site, Amazon.com itself had to fill otherwise. This was really an argument in the beginning of this online-retailing, as Robert Spector describes it: “[…] a more pressing reason was that Amazon.com Web site had all this white space to fill so it needed a way to generate more content” (Spector, 2000, 142). So the customer reviews has a simple spatial quality (or quantity) in the perspective of Amazon.com.

Writing all these reviews provides other customers a lot of information and helping guidelines by searching an appropriate product. How helpful these reviews are for following customers is shown in an extra column above the review (e.g. 4 of 5 people found this review helpful). So the customer reviews are also a kind of substitute for salesmen in the real world. It has an consultant function no real person or avatar could adequate fulfil for such an huge amount of products, Amazon.com offers. The knowledge of all customer reviews together presents a greater richness and quality about their products, that also the best companies salesmen could not present in such a big diversity. So the customer reviews are also pure information, something with what can be dealt on the Internet. So Suresh Kotha sees Amazon.com also as a kind of “information broker”: “The firm competes as ‘information broker’ for books and not just as retailer of books as do most physical bookstores” (Kotha, 1998, 216).  

All of these described effects can be placed in the service-sector of Amazon.com, where the customer reviews fulfil roles the customer service sector of Amazon.com had to fulfil otherwise.

 

 

4.2. Public relations meaning

 

Every new review, which is written on Amazon.com changes the site of the company and makes it interesting to return, because every time you come back the site has changed and is grown. This quality of a website is called ‘stickiness’, which is described by Holland / Menzel Baker: “[…] site stickiness is the ability to encourage customers to stay longer, navigate more deeply into a site and return more often” (Holland/Menzel Baker, 2001, 37). This site stickiness is a fact that is crucial for the success of a company, and it is reached in the case of Amazon.com also through the customer reviews.

In the beginning of the companies history (when the focus was exclusively on selling books and CDs) Amazon.com employed three book editors, who read book reviews, “[…]perused customers and reviewed current events to determine what books would be featured” (Spector, 2000, 141). Executive director Rick Ayre demonstrates the purpose of these employees for the image of the Amazon-brand in the following quote:

           

“If you spend a lot of time on the site, I hope you get a sense of the quirky, independent, literate voice, and that behind it all you’re interacting with people, and that it’s people who care about these things, not people, who are trying to sell you these things. My mantra has always been ‘the perfect context for a purchase decision’ (Spector, 2000, 141).

 

Now in 2004 the customer reviews are having this ‘quirky, independent, literate voice’ instead of Amazon.com employees. Customer reviews are making the products on Amazon (and simultaneously the whole company) more trustful, because the reviewers have no direct commercial goal to selling this or that article. Also as in the case of weblogs, trust is the crucial quality which makes the difference, and this is reached not through a corporate press release but through a “true voice” (see Dafermos, 2003,38 ff.) By letting the customers value, Amazon.com remains their image of neutrality, and authenticity. What is more reliable than a company which gives their public relations-tasks into the hands of critical customers?   

But the customers fulfil not only the roles to promote certain articles, but they also promote Amazon.com itself through writing customer reviews. Every review reflects back on the company, strengthens the customer-centric image of Amazon.com. Every written review, every registered reviewer promotes indirectly Amazon.com, because he or she accepts and supports through writing their way of business.

Founder and CEO of Amazon.com (which fulfils with his charismatic persona and his remarkable statements also a role in the brand) Jeff Bezos stresses in every given interview the great promotional importance of happy customers (especially in the online-market):

 

“Word-of mouth is even more powerful online than it is in the brick-and-mortar world because, as Bezos has said many times, in the real world, if you make a customer unhappy, he’ll tell five friends; if you disappoint a customer on the Internet, he’ll tell 5,000 friends – or maybe 50,000 friends. […] Happy customers will become evangelists for a company they like and will use the Internet as a megaphone to spread the world and help bring in new customers” (Spector, 2000, 136-137).

 

That this idea of promotion through happy customers works, can be seen on the Internet.[22] So all these tasks (stickiness, authenticity and promotion) show the great meaning of customer reviews for the realm of public relations.

 

 

4.3. Brand loyalty

 

All these public relations qualities lead direct to one of the most important thing within the online-market: brand loyalty.

“In general, brand loyalty is understood to describe characteristics of those consumers who have a strong commitment to a brand, because they view that a brand is being more satisfactory than alternatives and this evaluation is reinforced through repeated use” (Holland / Menzel Baker, 2001, 36) as it is defined by Jonna Holland and Stacey Menzel Baker.

This is of crucial importance in a so dense market as the one of online-retailing, or especially the online book industry:

 

“An analysis of the online book industry reveals that it is not difficult for a competitor to launch an online bookstore to compete with already established companies like Amazon.com. What is difficult is establishing and maintaining a loyal customer base. Considering the high buyer power and the large number of substitutes, attracting customers and keeping them is a challenge” (Gurbaxani /Shrikande, 1999, 8).

 

Because of the large numbers of competitors (e.g. in the book market BarnesandNoble.com or Borders.com), winning the brand loyalty of a customer is crucial.

Writing a review on Amazon.com, sharing the interest community, gaining status through being a top reviewer – all these factors are producing brand loyalty.[23] So Surest Kotha confirms in the year 1998: “It appears that these activities have promoted more loyalty among the firm’s customers. Currently about 40% of the book orders come from repeat customers (SEC, 1997).” (Kotha, 1998, 218).

This shows that the goal of Jeff Bezos and Amazon.com is reached:

 

“Bezos understood that there has always going to be people who will ‘flame’ a company on cyberspace bulletin boards and news groups, and that he couldn’t possibly hire enough people to monitor those sites and respond to the flames. But what he could do is build incredible customer loyalty so that when the company does screw up, there will be enough satisfied customers to come to its defence” (Spector, 2000, 137).

 

This customer loyalty to Amazon.com seems to be very strong, If you look in all these forums, discussion activities, ‘Friends & Favorites’ list around the web site of Amazon.com. Also a few examples of customer loyalty could be seen in history.[24]  And the starting point for all these activities which leads to this customer loyalty is the first step to participation with Amazon.com (except buying) the writing of customer reviews.

 

 

 

 

 

 

 

5. Conclusion

 

As I have shown in the last chapter, the customer reviews have a crucial meaning for a great realm of organisational sectors of Amazon. Customer reviews fulfil service and public relation tasks in providing content, information, authenticity, stickiness and promotion, and they strengthen direct and indirect the brand and customer’s brand loyalty. And all this work is done by two million customers. This great amount of helpful information is produced without any direct financial reward.[25] Customer reviews are after all unpaid work.

Nicole Schreiter in her dissertation Die Entdeckung des aktiven Kunden (2003) acknowledges this point in the case of Amazon.com (Schreiter, 2003, 1). This active client is not a new phenomenon, but exists already before the times of cyberspace:

           

“Dabei kann der aktive Kunde definiert werden als Konsument, der in seinen Leistungen gezielt in betriebliche Vorgänge einbezogen wird. Die Entdeckung des aktiven bzw. Produktiven Potenzials des Konsumenten ist keine Neuerscheinung” (Schreiter, 2003, 2).

 

Schreiter gives in her work a general overview about the active consumer theories and distinguishes between three different approaches: the level of society, subject and organisation. On the level of society none of the theories can describe the customer review phenomenon. On the level of subject / interaction does the theory of Mills / Morris (1986) fit in the point that it understands the consumer as partial employee:[26]

 

“Das Verständnis des Kunden als ‘Partial Employee’ (Mills/Morris 1986) verdeutlicht auch an dieser Stelle das Bemühen der Dienstleistungsorganisation, die Grenzen zwischen sich und dem Kunden aufzuweichen – den Kunden metaphorisch gesehen mit ins ‘Boot’ zu holen, um wiederum seine aktive Beteiligung auf diesem Wege zu steigern und erfolgreich zu beeinflussen” (Schreiter, 2003, 101).

 

This approach fits in the understanding that customers not only take part in an interactive process but really fulfil services or public relation tasks for Amazon.com by reviewing a product.

On the level of organisation theory of active consumers the theory of Schmid / Gouthier (1999)[27] is the only which really stresses the consumers valuing quality ans describes them as a kind of resources, as explained by Schreiter:

 

“Für die Dienstleistungsunternehmung gewinnt der aktive Kunde als Ressource eine zentrale Bedeutung um Wettbewerbsvorteile gegenüber anderen Dienstleistungsanbietern zu erzielen. […] Die Möglichkeiten der Kundeneinbindung reichen von der Phase der Ideen- und Designfindung bis hin zur Nutzung des Kunden als Produkttester” (Schreiter, 2003, 95)

 

But all these theories offered in the work of Schreiter only highlight one side of this phenomenon. These theories might fit for discount-market or online-banking, where the consumer has an more active part than before. But the great difference to these forms is that customer reviews have also valuable meanings for customers who write them.

These customers are seldom aware of the fact that they do unpaid work for Amazon.com, because the benefits they get through these reviews are more obvious to them. So customer reviews have a crucial value and meaning for both sides of the participatory process. And such an “opportunity” offered by Amazon.com, where both sides profit seems to be a really good deal.

 

6. Bibliography

 

• Admati, Anat R. / Pfleiderer, Paul (2001): Noisytalk.com: Broadcasting Opinions in a Noisy Environment

http://gobi.stanford.edu/ResearchPapers/Library/RP1670R.pdf

• Carpenter, Gregory S. / Tybout Alice M.. (2001): Creating and Managing Brands. In: Iacobucci, D. (ed.) (2001): Kellog on Marketing. John Wiley & Sons, Inc, New York, p.74-102
• Dafermos, George N. (2003): Blogging the Market: How weblogs are turning corporate machines into real conversations

http://opensource.mit.edu/papers/dafermos3.pdf

• Gurbaxani, Virjay / Shrikande, Aarti (1999): Competing in Book Retailing: The Case of Amazon.com

http://www.crito.uci.edu/itr/publications/pdf/AMAZON.PDF

• Holland, Jonna / Menzel Baker, Stacey (2001): Customer Participation in Creating Site Brand Loyalty. In: Journal of Interactive Marketing, Volume 15, Number 4, Autumn 2001, p.34-45

http://uwacadweb.uwyo.edu/smbaker/Customer_participation_site_brand_loyalty.pdf

• Kotha, Suresh (1998): Competing on the Internet: The case of Amazon.com. In: European Management Journal, Volume 16, Number 2, April 1998, p.212-222
• Krishnamurthy, Sandeep (2002): Case Study #1. Amazon.com – A Business History in E-Commerce Management: Text and Cases

http://faculty.washington.edu/sandeep/d/Amazon.pdf (while writing was the ULR deleted)

• Lessig, Lawrence (2001): The Future of Ideas: The Fate of the Commons in a Connected Wold. Random House Books, New York
• Reimerdes, Gesine (2001): Amazon: Markenaufbau im Internet In: Riekhof, Hans-Christian (ed.) (2001): E-Branding-Strategien: Mit Fallstudien von Amazon, Dell, Eddie Bauer und Otto sowie Konzepten von Boston Consulting, Elephant Seven, Grey, IFM, Scholz & Friends und Unykat, Gabler, Wiesbaden
• Schreiter, Nicole (2003): Die Entdeckung des aktiven Kunden: Eine Untersuchung zur Thematik der produktiven Beteiligung des Konsumenten am Dienstleistungsprozess im Kontext des sich wandelnden Konsums

http://archiv.tu-chemnitz.de/pub/2003/0118/data/Diplomarbeit_AKO.pdf

• Spector, Robert (2000): Amazon.com: Get Big Fast. Random House Business Books, London/Sydney et al.
• Subramani, Mani / Peddibhotla, Naren (2004): Quantity and quality: Understanding contribution of knowledge to public document repositories

http://misrc.umn.edu/workingpapers/fullpapers/2004/0416_050304.pdf