Website Conversion Blog
Normally, when companies announce a 40%+ increase in costs and miss analyst expectations, their stock takes a hit. Last week, Amazon was no exception with its stock dipping by 15% immediately after the news, but it has subsequently recovered to $118-$120 where it has been for the last month.
The earnings miss was probably more sensitive this quarter because of the launch of Apple’s iPad. Ever since the iPad launch, Amazon’s stock has been trading 20% lower than its high this year at around the $150 mark—assuming that Amazon’s Kindle reader would be negatively impacted. Amazon did not disclose its Kindle sales but is seeing strong growth for Kindle and Kindle-based ebook purchases. Kindle is becoming to Amazon what iTunes is to Apple.
Long time watchers of Amazon will recall that we’ve seen this before. Amazon is not afraid of short term blips in its stock price, accepting them as a necessary evil when it comes to building a stronger, more competitive business.
Remember the market reaction when they announced free shipping?
Over the long term, Amazon has not disappointed by being focused on doing what’s in the best interests for its business long term. By investing heavily in sales and marketing, free shipping, and tech infrastructure, Amazon is confidently building an ever bigger business. Oh, and don’t forget that Amazon grew by 41 percent year over year in this last quarter, achieving $6.57 billion in revenues.
Amazon also stated that more than $1 billion in sales had been achieved via mobile devices over the last 12 months. That includes book downloads by Kindle and iPad users, of course, so it doesn’t (yet) signal the arrival of mass mobile commerce.
While Amazon hasn’t disclosed what made up its $1 billion of mobile sales, it’s a pretty safe bet that ebooks purchased using Kindle and the free Kindle reader for iPad and PC make up the bulk, and most of these will be repeat purchases.
This also shows the way in which their whole customer philosophy is geared towards repeat purchases. By forcing a full registration before making a first purchase, Amazon is willing to risk marginally fewer sales by not providing a ‘guest checkout’ facility, in return for a streamlined repeat purchase experience. Once a customer is registered, Amazon markets to them extensively using email, and when a customer returns to make their second purchase, it is done with a maximum of only six mouse clicks.
Tags: amazon, analyts expectations, customer philosophy, ecommerce
Wonderful blog! I truly love how it’s uncomplicated on my eyes and the details is well written. I am wondering how I can be notified whenever a new post has been made. I have subscribed to your rss feed which should do the trick! Have a nice day!
Agree on the wonderful blog comments. Though I wonder about that last statement… “Amazon is willing to risk marginally fewer sales by not providing a ‘guest checkout’ facility, in return for a streamlined repeat purchase experience.” From what I have read, eretailers have seen 300% increase in sales by utilizing guest checkout… thats an increase that can hardly be categorized as marginal difference.
Hi Salman
It’s fair to say that providing a guest checkout is widely considered best practice, and this will boost page level conversions of these shoppers that want to see the total order value (e.g. shipping and handling costs) prior to committing. Whether this changes the overall end-to-end conversion rate is more debatable.
Ultimately all purchasers of goods (that are going to be shipped) will need to give a physical delivery address and payment details, and an email address for a confirmation. So the key question is where in the shopping cart process you capture these details. A guest checkout should streamline and defer the capture of this data until the last moment.
It is also worth looking at where the cost of shipping is provided. If this is not on the product detail page, then this will definitely cause a spike in your abandonment rate, and then providing a guest checkout will definitely get more people to go further down the conversion path, but not necessarily to buy.
Charles