How did Amazon use big data to conquer the e-commerce space?
2/2/2020 12:00:00 AM
Amazon started off like many other e-commerce players in the market, but now it stands head and shoulders above the rest. Amazon too followed the ‘everything under one roof’ model which is relevant to all online shopping sites, but the difference between Amazon and the rest, is that they make use of big data analytics.
Overwhelmed with options, customers may sometimes feel lost and unable to make effective purchasing decisions. Amazon uses big data to solve this issue by gathering customer information based on their browsing and purchasing history. This helps create a more streamlined process where one can enjoy an individual shopping experience.
To better understand how Amazon has changed the game and emerged a winner, read on.
What is big data and how does Amazon use it?
As the name suggests, big data is huge as it’s a collection of data that grows rapidly over time. It is extremely vast and highly complex, making it difficult for traditional management tools to process or store.
A good example of big data is Facebook, which has approximately 500+ terabytes of new data inserted into its database on a regular basis. This comprises photos, videos, statuses, messages and a lot more.
Similarly, Amazon collects data on each customer as they browse their site. It studies every aspect of the individual, ranging from products they look at, buy, return, their shipping address and also whether they leave feedback or not. Amazon big data creates a wholesome view of the customer by studying them with precision.
Subsequently, you as a customer are given product choices that fit your needs perfectly. The technology used by Amazon works based on collaborative filtering; this means that first it builds a picture of you, compares it to other profiles and then determines what you want to buy.
How big data works in the e-commerce industry
E-commerce companies can make better decisions by using big data, and this in turn generates leads and brings profits to the business.
- Amazon e-commerce is a great example of how data can help give customers a superior experience;
- Predictive analytics is another major use of big data as it helps predictwhat the customer will buy;
- Big data is also used to personalize emails that can significantly improve conversion rates;
- It is also useful in changing the prices of products with the help of real-time analytics.
Amazon’s impactful use of big data
While data is easily available and can be used by any business, Amazon is a pioneer in collecting, storing, processing and analyzing customer information. Here is how they have used big data to gain leverage in the e-commerce sector:
- Persuasive buying options
Very intelligent use of big data analytics is used to persuade customers to buy more when they browse. Amazon’s product recommendations are a part of big data as they showcase consumer products similar to what a customer has bought in the past or has in their cart.
This array of options is appealing to the shopper, and with personalised products, consumers end up buying more. It also saves them time as they don’t have to hunt for things and gives customers the image that Amazon is able to meet all their shopping needs.
- Constant price changes
Previously, no matter how many times you visited a website, product prices generally remained the same. Amazon changed this as well with big data and frequently updates product costs. This is another thing that drives customers to the e-commerce portal each day as prices of their favorite items can become lower at any time.
Amazon changes the price of 2.5 million products a day and can easily monitor competitor pricing as well as the available inventory which helps them decide the costs of goods.
- One-click ordering
To make shopping more accessible and to prevent customers from straying to other sites, Amazon has one-click ordering. This is a patented feature that is enabled instantly after your first order has been received.
This feature works if you’re a regular user of Amazon and the site already has your shipping address and favored payment method.
- Supply Chain Optimization
Amazon understands that quick delivery of goods is necessary to keep customers engaged, which is why they take every measure to fulfill orders quickly. Once again, big data is implemented so only those warehouses that are near to particular customers are used, and this helps bring down shipping costs by 10 - 40%.
Big data analytics provides endless opportunities and this is something you can make an excellent career out of.
The Diploma in Data Analytics Co-op Program offered by the Toronto School of Management (TSoM) can be your gateway to success in this sector. Click to learn more.