Dot-commerce: World's biggest e-tail brand writes book on marketing savvy

By Published on . looks down on everything around it, both literally and figuratively.

Its new offices, in a refurbished 1930s hospital overlooking Seattle, grant views of the Puget Sound and Olympic mountains many would kill for. Microsoft Corp. founder Bill Gates chose to spread his business across myriad low-slung office buildings in the suburbs, but founder Jeff Bezos decided to put his on a pedestal.

It's a place deserves to be. is the biggest e-commerce brand in the U.S., if not the world, with 13 million customers who have made a purchase -- one for every five Americans on the Internet.

In October, was the seventh-most-visited site, according to Media Metrix, with 12.9 million unique visitors, more than 3 million more than its nearest e-commerce competitor, eBay. Amazon shipped $56.3 million worth of packages by Priority Mail via the U.S. Postal Service during its 1999 fiscal year, making it a top priority-mail customer.


"You can't pick up a publication or turn around without hearing or seeing something about Amazon," says Clay S. Timon, chairman and president-CEO of brand consultancy Landor Associates. "In a very short period of time [it] has built a brand that is right there with the most powerful brands in the world."

Its company name appeared in more than 1,200 newspaper and magazine articles in November alone.

A Landor study ranks the third most powerful Internet brand, after Yahoo! and America Online's Netscape.

NONE COME CLOSE is the 16th most reputable company in the world, polling company Harris Interactive raves, better than Nike or McDonald's Corp.

In a year when hundreds of dot-com companies are trying to gain a small slice of public consciousness, no company has come close to building what has built: an e-commerce juggernaut that sends both Internet start-ups and brick-and-mortar stalwarts running for cover every time it makes a move.

That brand-building prowess, along with the customer-centric mentality that pervades its hilltop offices, have earned honors as Advertising Age's 1999 Marketer of the Year.


What makes a marketing success, and so maddeningly difficult for others to emulate, is its dogged determination to make the things it does so smart and so obviously right that it seems like they were conjured up effortlessly.

What understands perhaps better than any other marketer -- online or offline -- is that marketing isn't just great ideas. It's execution, and what Amazon works hardest at is execution.

"What [Mr. Bezos] has done with [shows] he understands they are in the business of manufacturing consumer relations, not selling goods," says John Grace, executive director of Interbrand, a consultancy. "At the end of the day, that relationship will be what will endure."

His use of the word "manufacturing" is telling. It implies -- quite accurately -- that Amazon's modus operandi is not to coddle customers with feel-good marketing, but to engineer the shopping experience so precisely that customers can't help but feel good about the place. is so powerful its name has become a verb -- move too slowly on the Internet and you run the risk of being Amazoned.

While most other Internet retailers are talking niche, niche, niche, is living up to its name. This year, it added seven product categories -- auctions, toys, consumer electronics, home improvement, videogames, software and local merchants. It also made multimillion-dollar investments in,,,, an outdoor retailer,, an online gift registry. This month it acquired a stake in, a luxury goods retailer.'s innovations -- such as 1-Click ordering and customer product reviews -- have been copied across the Web. Mr. Bezos, a former hedge fund manager who founded the company five years ago in a suburban Seattle garage, has become online retailing's most visible spokesman.

"We are building a new model for creating a brand," says Joe Galli,'s president-chief operating officer. "What we're building is a brand that stands for an obsession with the customer."


From the day he launched the company, Mr. Bezos has been its most powerful marketing tool as he tirelessly works the PR engine. Much of the company's early advertising strategy, including a memorable radio campaign in which sought to rent places like the Pentagon to house "the world's largest bookstore," came directly from his vision.

Even now, though the marketing department has grown, Mr. Bezos remains the motivating force. He still sits in on some ad creative presentations, and his loyal staffers are tireless supporters of his vision, even reciting the same catchphrases their boss uses ("the world's most customer-centric company" is a favorite), over and over again.

Mr. Bezos' obsession with the customer is legendary. When you buy something from, you know immediately if it's in stock and how soon it can be shipped. If could give postal carriers pagers to let customers know when their package has been put in their mailbox, it probably would.

Customer focus has served well. Its total customer base has more than doubled from 6.2 million at the end of 1998 to 13.1 million as of Sept. 30. Repeat customers accounted for 72% of its $356 million in third-quarter sales, up from 64% at the end of last year.


But being customer-centric isn't what truly sets apart. Plenty of successful marketers -- Dell Computer Corp. and Nordstrom, to name two -- have made customer service a foundation of their brands. isn't even profitable -- not only is it Ad Age's first dot-com Marketer of the Year, it's the first money-losing one. is on track to lose an estimated $371 million this year and $341 million next year, according to Merrill Lynch & Co.

Nor has's marketing success come from a particularly big ad budget. The company spent just $17 million on measured media last year, according to Competitive Media Reporting. An estimated $50 million fourth-quarter advertising push will raise this year's spending total to about $75 million, still peanuts compared to offline marketers and even other dot-coms, like E*Trade Group. The push is part of an overall fourth-quarter $90 million marketing budget that includes coupons and promotions. isn't known for breakthrough advertising. Its work is mostly tactical, aimed at getting as many people as possible to its site. Print, with some outdoor, has been the brand's mainstay.


TV spots that broke last month feature a male chorus singing lyrics such as "'s got tons of toys. Every ton weighs 2,000 pounds. That's a lot of toys." Subtle, they're not.

FCB Worldwide, San Francisco, has handled since 1997, and Dominic Whittles, group account director at FCB, notes steers clear of the audaciousness of other dot-com advertising. It instead strives to be inclusive to its target audience: cyber shoppers from 21 to their late 50s.

"The voice is right for the brand," says Mr. Whittles.

Other marketers such as The Gap and Wal-Mart Stores also have developed distinctive voices for their brands. The Gap's image gave birth to award-winning advertising while Wal-Mart's ads simply work. has managed to create a stir with consumers and the media -- even if the advertising is not yet remarkable.

MARKETING CHANGES has excelled as a marketer this year amid some turmoil in its own marketing department. VP-Corporate Marketing Allen Olivo, a high-profile hire from Apple Computer, ran marketing less than a year before shifting to a part-time assignment working from San Francisco. Marketing now is managed by VP-Marketing Jaleh Bisharat, who joined this summer after it acquired her company,

When you get right down to it,'s business model -- selling merchandise -- isn't nearly as unique as other Web retailers'.

"eBay is much more of an innovation. Priceline is much more of an innovation," says Mohanbir Sawhney, professor of electronic commerce and technology at Northwestern University's Kellogg Graduate School of Management. But "if you do a lot of things really well -- in totality, that starts to look like a revolution." succeeds as a marketer by continually enhancing its services with little innovations and, most important, by executing the details.

Consider its holiday preparations. is awash in gift wrap -- far more than it needs for the holiday season. Last year, it drafted most of its salaried staff into packing duties so no shipment would arrive late. Key staffers this holiday season are meeting weekly to plan a course of action if a link in the chain breaks.

One Wednesday in mid-November found Ms. Bisharat mired in discussions on how to deal with response to a $10-off coupon that placed in magazines and planned to e-mail to all 13 million of its customers in time for the holiday season.

"We've had just a few too many meetings on how to deal with demand," said a weary Ms. Bisharat during an interview in her office.

At other companies, dealing with demand might be a fulfillment or sales problem. At, it's Ms. Bisharat's problem. If a customer doesn't get what he or she wants when says it will arrive, that's a problem the marketing department has to solve. Ms. Bisharat says she and a cross-functional team from customer service and distribution will meet as many as three times daily to monitor demand and figure out solutions.

"Here, marketing is not limited to external communications," Ms. Bisharat says. "It's all the details related to what delights a customer."

Hence, she oversees a department that includes not only advertising and promotions, but loyalty marketing, customer acquisition and customer experience.

For an Internet company, is surprisingly deliberate in its decision-making.

"We're sort of a funny combination of very quick and very slow," says David Risher, senior VP-product development of When it comes to advertising, for example, "we tend to ask our agency to give us the 20 ideas they had contemplated and collaboratively work through what the best two or three ideas are."


Ask most companies about their smartest marketing decision, and they'll mention a promotion that boosted sales 15%, or an award-winning ad campaign. But to Mr. Risher, it's's decision to build five new distribution centers across the country this year, enabling the company to deliver packages faster and more efficiently.

The company has made few visible mistakes in its execution. This summer, it got a tremendous amount of backlash over a feature called Purchase Circles, which told consumers what various affinity groups, such as colleges and businesses, were buying on Privacy concerns forced to change the feature within days.

"We didn't do a good enough job of letting people know what it was all about. That was a mistake," says Mr. Risher.'s executional mastery will get its biggest test next year, however. Though the company has dominated online book sales, it faces significant competition in several of its new business lines, particularly auctions, where eBay reigns supreme, and toys, where eToys is the site to beat.

"This year was all about trying to break out of the notion that is just a bookstore," says Mr. Risher. It historically derives the majority of its revenue from books -- although it doesn't yet break out figures.

EXTENDING THE REACH told analysts this fall that book sales could account for less than half of its fourth-quarter revenues. It also told analysts that it expects the book business to become profitable this quarter.'s goal is to be the starting point for any online shopping experience -- "the place you can find and discover anything you want to buy online," Mr. Rysher says.

"It will take a while for people to understand our brand promise, which is a rather audacious one," he says.

And one that won't be easy to deliver, marketing experts caution.

"The No. 1 concern I would have with is are they diluting the brand? They may be stretching themselves too far, too wide, too quickly," says Prof. Sawhney.

"The true test is now," concurs Susan Fournier, associate professor of marketing at Harvard Business School. "Can they successfully leverage the brand . . . into real brand growth? Many fail. They get greedy and they want to become something the consumer has not yet given them license to become."

Brand building, Ms. Fournier says, is a two-way street. If consumers don't accept as "the place to buy anything" as it touts itself, then all of's efforts will have failed.

Already a king of e-mail marketing, plans to get even more personal in the next year, sending "relevant offers [to customers] based on who they are and what they like to buy," Ms. Bisharat says. The goal, she says, is to "have each customer understand that they're alone in the shopping mall" -- without, presumably, the uncomfortable feeling of entering a store where there's nothing but sales clerks standing around folding sweaters. has succeeded as a marketer -- and lost a raging river of money -- by investing whatever it takes to delight the customer. The company still must prove whether a winning strategy for customers can be profitable. While faces intense price competition, it may be stuck with a higher cost structure needed to support its Nordstrom-quality customer service.


If falls down in execution, it risks damaging its brand, says David Aaker, vice-chairman of Prophet Brand Strategy and author of "Building Strong Brands."

"Can they deliver their promise on the auction site? Can they deliver their promise in toys?" he says. "If they generate a bad experience, that will hurt the brand."

It's a challenge Mr. Galli acknowledges: "The thing that keeps me up at night is disappointing our customers. That will restrict our growth more than anything we can think of."

As the dot-com category grows exponentially and new brand.coms emerge daily, quietly underscores its name by occasionally referring to itself simply as Amazon. The shorthand reference crops up in TV commercials and executives' remarks. The motive: solid brand identification.

"Once people understand we're an Internet company we can focus more on what stands us apart," Mr. Risher says.

Contributing: Alice Z. Cuneo

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