Turning Enterprise Information Management – such as Master Data Management, Data Governance or Data Quality – into a value proposition for lines of business is not an easy game. But, the reward may be huge.
Amazon is a poster child in this discipline; over the years, they have established next practices. By next practices, I mean that the way that they fuel their process with a data driven approach is so disruptive that it takes years before their peers adopt them as best practices. This is why Amazon is under scrutiny by many people, from competition to business consultants and industry thought leaders. Even most importantly, those approaches are also directly visible and deliver value to each of us, as customers, making it an excellent and easy to understand example to illustrate how a sound information management strategy can translate into measurable business outcomes.
First, Amazon knows its customers, and makes this knowledge actionable to personalize all interactions with them accordingly, in real time. Since the very beginning, the Amazon.com site deals with identified customers, rather than online visitors. In 1999, they patented the so-called one click purchase: because they were able to uniquely identify customer as soon as they connect to the Amazon.com site, without an explicit login process, they were able to create a frictionless checkout process, with no intermediate steps to get the data necessary to fulfill payment and shipping. Indeed, this approach not only helps to provide a better experience for Amazon customers. It also results in dramatically better transformation rates for transactions happening with customers that opted for this one click option, representing a large proportion of amazon.com sales. Add to this the fact that fraud management is much more efficient when applied to known customers that with anonymous visitors, since payment data is associated with other data and used on a repetitive basis. Lastly, Amazon personalizes the interactions with their customers, provides recommendations, and focuses on prolonging customer journeys with up-sales once a sales transaction has been fulfilled… All those data driven activities translate into billions of dollars in terms of Amazon revenue, and into sustainable business benefits due to increased customer loyalty.
Second, Amazon illuminates its product portfolio. Not only they excel at referencing their products, but they augment the factual information they give on products with multiple value added features: customer reviews, similar articles, lists, etc. As a result, Amazon.com has become over the years a reference catalog not only for Amazon.com customers but for consumer goods product data as a whole. As an illustration, even if I almost never buy music albums anymore now that I became customer of a subscription based streaming service, I regularly visit Amazon.com to get information about the latest album releases. Amazon.com catalog has proven to be so powerful in terms of attracting customer demand that search engines, price comparators and recommendation services are struggling to find a place in categories where Amazon excels, contrary to other domains where Amazon is weaker or absent such as hospitality, travel and transportation (with Trip Advisor, e-bookings, Yelp, etc.). As an illustration, some of us may remind that Kelkoo, a product price comparator was acquired by Yahoo for $475 million in 2004… and then sold four years later for a fraction of this price ($100 million). Now imagine how challenging it has become for Amazon competitors to attract visitors on their own web site, avoiding that their own customers use their physical shops for Showrooming or drive key processes such as defining their product price policy, now that Amazon has become the de facto standard for product information?
To be continued: part 2.