Amazon provides more and more services to make our lifes easier and therefore gets more influence on our daily routines. The collected data helps the company to gain even more power and money.
Amazon is the world's biggest online trader. Hardly any other company has a market position as dominant as Amazon, also in Austria.
Market leader - thanks to unlawful clauses
Amazon gained its position as a market leader primarily with its smooth and quick delivery system and its relatively low prices all over its product range. This presents a competitive advantage that Amazon acquired by forcing its traders to accept unlawful price parity clauses for years. With those, Amazon made sure that its partners don't sell their goods anywhere else at a cheaper price.
For customers of Amazon, the delivery is free of charge when order values exceed 29 Euros (this does not apply to purchases from a partner trader) and mostly can send them back for free also. This is another reason for high customer satisfaction.
Poor working conditions
Two years ago, the company was subject to bad press in the German speaking area due to poor working conditions, which also led to calls for boycott. However, this didn't harm Amazon significantly as customers still continue to value its cheap prices, reliable delivery practice and its credo to always take the customer's side in case of doubt. Those facts seem to overrule internal problems, even if they become public.
Additional services and products
Amazon also offers its own products like the ebook reader Kindle, a lending library, a movie database, a tablet pc (Kindle Fire) and also a smartphone. With all these devices and services, the trader is able to collect further data about the purchasing behavior of its customers. Amazon uses this data to gain profit in the advertising market.
Advertisments
The Amazon Advertising Platform ensures that consumers are provided with advertisments that represent their searching and purchasing behavior, not only on Amazon shops, but also on external websites. Consumers therefore will get forwarded to Amazon by advertisments - and this will become more and more in the future, as Amazon becomes a big player in the advertising market.
An example for the strategy of Amazon is the speaker "Alexa" that can not only play music but also listen and speak itself. It is only available at the English Amazon website and is connected via WLAN to the Internet. "Alexa" can read stuff from the Internet, answers questions with the help of Wikipedia and creates shopping lists on call. Until now, it simply saves the purchasing requests, but experts think that sooner or later, also so-called "Zero click orders" will be possible: Consumers will be able to purchase goods by voice command.
This would further reduce any hesitations or obstacles regarding online shopping. "Alexa" already sends all voice commands to the servers of Amazon that uses them to get to know more about its customers.
Companies examine our daily life
IT experts are convinced that we won't be able to get around speech recognition in the future. The so-called "Internet of things" and smart home technologies are propagated these days, but it is questionable how companies will enter our daily lifes with these new technologies.
The speaker is "always on" and therefore Amazon could - in theory - save everything that "Alexa" hears. This leads to the question: Who gets all this information? And what if someone hacks into the device and listens?
Customer ratings
Caution is also necessary regarding customer ratings. Especially the evaluations of members of the "Amazon Vine" club need to be read carefully. Amazon Vine is an "exclusive club of product testers". Members are invited by the trader. According to Amazon, those are customers who have proven to be reliable reviewers with expert knowledge. Their reviews are highlighted with a green banner.
Club members receive free products regularly and usually are allowed to keep them. Amazon assures not to influence them in any way and to accept also negative reviews. A consumer protection group from Germany found out that Vine members often help products with a "positive review boost".
Vine members usually write a good evaluation and give high ratings for products. It is important to keep in mind that they didn't have to pay for the expensive electronic device. Some of them, e.g. if Samsung provides the free product, only learn if they can keep the device after they wrote the review which is a motivation to make it sound good.
Pricing
Another thing to keep in mind regarding Amazon and other online shops: The prices of specific products, especially electronic devices, change every other hour. In 2013, an evaluation showed that Amazon does 2.5 million price changes per day with the help of an intelligent pricing software.
This programm analyses prices of the competitors as well as the purchasing behavior of customers and then calculates at which time and at which price the products are most likely to be bought. Amazon tries to be less expensive than others.
At the same time, the programm is able to recognize when or for which products customers are willing to pay more (e.g. electronic equipment) and therefore creates higher prices. The customer then gets the impression that Amazon has low price levels in general.
Online giant Amazon
The EHI Retail Institute estimates an annual turnover of 342 Mio. Euro of amazon.at, followed by universal.at with 107 Mio. Euro revenue. A survey of Marketagent showed that in 2014, 85% of Austrian consumers visited amazon.at, 72% ordered from it; willhaben.at ranks on second place with a visitor's share of 66%.
Copyright of the German version of this article: 2015 Verein für Konsumenteninformation (VKI)
Translated by European Consumer Centre Austria (ECC)
