Amazon.com with more than 17 million customers and over a billion and a half dollars in annual sales is the world’s largest E-commerce E-tailer (Robinson, 2000, 1). Amazon.com’s innovation in technology is one reason for its enormous success. So, too, are its enormous advertising expenditures “Amazon.com is currently spending 174 percent of its entire revenue on marketing…74 percent more than the total amount of money it takes in on marketing” (Robinson, 2000, 1). Because of these enormous expenditures, huge discounts on its leading sales items (books, CDs, and DVD/Videos), and five years of continuous expansion, the investors of Amazon.com have never seen a return on investment.
The main drive behind Amazon.com’s IT agenda is the need to reduce costs while maintaining customer satisfaction and product quality. Amazon.com’s technology is a big reason for its success in building a brand name with immediate recognition among consumers as it continues to expand product lines. It was technology that made Amazon.com a hero among consumers when it was able to deliver its order in time for Christmas in 1998 because of its IT systems for distribution, something many companies failed to do. Further, the company has recently implemented a new inventory control system which led to a $39 million right down in the fourth quarter of 1999 (Hof, 2000, 2).
The driving force behind Amazon.com’s technology agenda is the desire to reduce costs and earn a profit as it continues to apply economies of scale to its vast operations. Amazon.com has been admired as a E-commerce standard for technological innovation and success. Its IT infrastructure is respected for many features like its 1-Click technology which allows consumers to pay for their products and have them sent to their door with one-click of the mouse (after customers put their payment and address information into the one-click database upon their initial purchase). T...