Amazon.com Technology & Economics

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 desi

ing Managed Objects' systems-and-network management framework, Formula, as a way to relate network events, such as alarms, to business processes. And one of its first projects with SAS Institute involves using data-analysis tools for performance management and capacity planning" (Foley, et al, 2000, 3). Company founder and CEO Jeff Bezos believes that technology is crucial in making the company achieve its goal in the minds of consumers of being the "Earth's most customer-centric company." Bezos is an innovator and by all accounts a highly enthusiastic, effusive, and motivated individual. Bezos is bothered by his formerly innovative technology of customer tracking. He laments the fact that all Amazon.com understands or knows about the customer is the last product or purchase they made. He believes there is too much time between purchases for this to be significant in today's market. Because of this, Bezos' partnership with SAS Institute is designed to use SAS tools that represent state-of-the-art customer-relationship management and business-information software. As Jaya Kolhatkar, data-mining manager in charge of a group of data-mining experts at Amazon.com, reveals "Using SAS Institute's Enterprise Miner data-mining algo