Amazon business plan

Web Strategy Case Studies: Amazon.com & RealNetworks Anil Kumar ISMC

Preparing Content for the Web
There are consumption pattern differences among readers of print and Web media
Print readers tend to read in a linear fashion
Web surfers may interact with an article and read elements out of order
Non-linear
“Branching”

Design Issues
Some content specialists argue that vital information should remain “above the scroll” on all pages
Thus, some suggest that you write in “chunks” delivered one page at a time

“Chunks” Strategy
Repurpose print materials into “chunks” that each have a unique page
Add graphics and interactivity
Each “chunk” is usually fewer than 150 words
Text can be viewed on the screen without having to scroll
This is only one strategy – many sites do not use it!

Examples of “Chunk” Style
McDonalds
Nike
Keebler

Web Writing Tips
More casual than print
Use bullet-point lists
Minimize use of hypertext links
All links should be relevant
Provide feedback option for readers

Building the Site
Ideally, the Web site team consists of:
Copywriter/editor
Graphic artist
Web programmer
A public relations professional who can do all three increases their odds of getting hired

Usability Tests
Before publicly launching your site, it is not uncommon to conduct “usability tests” with a test audience to determine if the site is easy to navigate

Overview of Web Strategies
Success Story at Amazon.com
Evolution of a Design
Personalization and Automation
Failure at RealNetworks
Communication is Content Development
Rolling Stone Radio project

Success Story
Amazon.com is the world’s largest e-commerce site
During the dot-com “boom,” they hired aggressively as investor cash came in
“ Bloated” and inefficient site infrastructure
The site needed to streamline its content development strategy
This included a shift from an editor-created to a user-generated content model

Has over 35 e-commerce main product categories and hundreds of sub-categories
Each category has at least one full-time editor
Some have several editors
Each editor is responsible for maintaining front page of each “store” and sub-pages, including product detail pages

Amazon.com Content Management
With millions of products, Amazon.com needs help from the public to keep the pages up-to-date and filled with useful information
“ User-generated Content”

Amazon.com Content Features
Reviews
Listmania
“ How-to” and Buying Guides
Product manuals
Customer Images
Ref-tags
Discussion Forums
Wikis

Listmania! Examples
Customers create their own lists to share with others
Each item in the list is linkable to a product
Examples:
Top 15 Movies of 2005 by fattyjoe37
The Best Albums of 2006 by volantsolo
“Awesome Books” by fantasyrules

Guide Examples
Customers create their own guides to share their expertise with others
Examples:
How to set up a wireless home network
Taking a better picture with your digital camera

Visitor Experience
Customers indicate that they enjoy the “community” aspect of shopping
They trust the collective opinions of other shoppers more than the manufacturers
The “Amazon Review” has become a very powerful force in the industry
Buying decisions are made for purchases both off- and on-line

Customer Reviews
Amazon.com has thousands of unpaid writers voluntarily submit their reviews
Top reviewer Harriet Klausner has written over 12,000 reviews without pay for the site

Personalization at Amazon.com
Amazon.com developed an infrastructure where each visitor page is personalized
The homepage displays items that Amazon.com thinks you are likely to buy
Visitors indicate that they like the personalization

Amazon.com Personalization
Personalization technologies are also easy to manage and popular with visitors
Previous purchase data collected
Cross-referenced with other sales data
A “personalized” store homepage suggests products based on like-minded customers
Includes “recommendations” embedded into page

Automation at Amazon.com
Data is king at Amazon
Many examples of data driven automation
Channel management
Web site real estate management system
Automated e-mail measurement and optimization
Merchandising
Customers who bought X also bought…
Recommendations
New releases, top sellers
Purchase Circles
Advertising
Automatic ad generation and bidding

Example: The Amazon.com Homepage
Amazon’s home page is prime real-estate
The past:
Every category VP wanted top-center
Friday meetings about placements for next week were getting too long, too loud, and lacked performance data
Today: automation replaces intuitions
Home page is made up of slots
Anyone can submit content for a slot
Content is chosen based on real-time experimentation

E-Commerce Staff Structure
Organized for execution
How it used to be
This works rather better
Small, cross-functional teams
Able to execute end-to-end
Self directed
Established group goals and measure progress
Technology People Business People “Dumb idea!” “Do this!”

Electronic Media and E-Commerce
What makes the site attractive to consumers?
Strong reputation for good customer service
Secure from “hackers”
Large selection of products
Easy navigation
Clean Web design that maximizes click-throughs and/or sales

Amazon.com Design Evolution
Started with a few “tabs” representing each store
But Amazon.com was expanding…
More products = More “tabs”
Should the “tabs” go?

Amazon.com Design Evolution
A new design was needed
Lack of action could mean a mountain of “tabs”
NOT A GOOD
DESIGN

Design Evolution
Initial redesigns focused on an index directory in the style of Yahoo!
This resulted in reduced sales

Design Evolution
More redesigns in the index style
Sales still declined
Customers wanted the “tabs” back

Return of the “Tabs”
Now only three tabs
“ See all 35 Product Categories”
Roll-over with mouse brings up the index of all stores
“ Your Store”
Personalized store with recommendations
Logo tab
Default to front page

Lessons Learned
Use focus groups and user surveys to test out a design before it launches widely
Design can play a key role in how a site is perceived by its public
“Above the scroll” real estate is valuable so don’t waste it!
A user should be able to navigate successfully through the site without having the scroll the screen

Lessons Learned
Be aware of the bandwidth of your average user
U.S. has shifted from a dial-up to broadband environment
Multimedia-intensive designs and sites are only now gaining traction
Your design strategy will depend on who your typical visitor is
Consider how minimal Google.com is
Compare this to YouTube.com

Cost Efficiency
Advertise your site using viral and cheap techniques
Amazon.com has stopped buying ads on mainstream TV, radio and print in favor on online referral programs
Media advertising did not bring in enough revenue to justify the cost
The site uses promotions with other sites and “street” advertising to get word on in the influential communities

Communication is Critical
If there is a dependency on technology developers, then the content experts must communicate early…and often
A good project can fail due to poor communication

Anatomy of a Failed Project
Example: RealNetworks’ Rolling Stone Radio
Goal was to promote new “G2” technology
A new version of RealPlayer with optimized streaming media playback

RealNetworks
RealNetworks asked me to create a G2-exclusive Internet radio service
A business deal with Rolling Stone magazine was created
Rolling Stone Radio was born

Content Development
My background is in editorial development and the music industry
I led the creative team
Design of the player
Partnerships with music industry
Another team was responsible for the technical infrastructure and development of the software code

Rolling Stone Radio
Rolling Stone Radio was the first “mainstream” Internet music service
Introduced in 1999
Co-owned by RealNetworks and Rolling Stone
Multiple channels of music
Interactive voting

Rolling Stone Radio
Featured celebrity deejays
David Bowie had his own 24-hour channel
Lots of “hype” from the media

So Why Failure?
Rolling Stone Radio had all the ingredients for success…yet it failed.
Why?

Communication Crunch
There was too little communication in the production team
The decision-making process was too decentralized
Internal disagreements and chaos
Technology team and content team clashed
New technology changes were implemented without informing the content team
Media blitz preceded the actual launch
Several delays in the launch
Release was late, product was ‘buggy’

Business Model, Anyone?
“Too much, too soon”
Broadband wasn’t widely available yet
Bandwidth was expensive
Customers enjoyed the site, but the cost of hosting the streaming media increased as more people “tuned in”
The project did not make money
Streaming media is bandwidth-intensive
Who is paying for the media servers?
Advertising revenue was not large enough to support the costs

Lessons Learned
Solid business model is necessary
“Cutting edge” = “Bleeding edge”
Being first may not translate to success
Key stakeholders in the content development teams must meet and agree to “milestones”
Each “milestone” is a mutually-agreed “deliverable” in the product development cycle
Deviation from the agreed-upon development is discouraged

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Amazon business plan

by Anil Kumar on May 24, 2008

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