Gold in Amazon's box of tricks

The e-commerce pioneer is constantly trying new ways to tempt us to buy more online.

The e-commerce pioneer is constantly trying new ways to tempt us to buy more online.

A few weeks ago I wrote about some of the interesting experiments that Google is conducting as it tries to find new ways to exploit its vast holdings. In this respect it is following in the footsteps of the e-commerce pioneer,

Very early on, Amazon recognised that it could not simply sell books cheaply over the Internet, since anyone else could do precisely the same thing, leading to a price war that no one could win. Its response to this threat was twofold.

On the one hand, it tried to build on and consolidate the brand by expanding the range of items it sold. Here, Amazon seems to have over-reached itself: it expanded too fast into too many areas, and ended up with enormous cumulative start-up losses.

The second strand of its strategy has been much more successful. This has involved inventive schemes to create an increasingly rich culture around the business of online selling.

For example, alongside obvious devices such as combination purchases and featured products, Amazon hit on the idea of suggesting further items of interest on the basis of other customers' buying patterns.

This idea has been so successful - and emulated - that we tend to take it for granted, but Amazon deserves credit for homing in on one of the key benefits of e-commerce: the ability to analyse and exploit large-scale buying patterns.
Similarly, another Amazon feature that most of us barely notice is customer reviews.

This kind of direct feedback has become a classic feature of online commerce, but it was Amazon that developed the idea to the point where its customer reviews are some of the most useful and entertaining parts of its site.

Nor has the company finished experimenting in this area. Recently, Amazon introduced a What's Your Advice feature that solicited users' suggestions for alternatives or additions to the purchase under consideration. Unfortunately, Amazon had to pull this scheme in its original form because it found that "commercial abuse" was starting to creep in.

Other novel ideas that it is currently trying out include restaurant menus and various mail order catalogues, for example for industrial supplies. Catalogues can be viewed online or ordered by telephone. Since this is a free service for the catalogue companies, Amazon is presumably using this to enrich its culture generally. But another area where it has been experimenting promises to help its bottom line too.

This involves the sale of used goods. There are two main kinds, fixed-price and auction sales. Fixed-price used goods have been integrated into the main selling pages through Amazon's marketplace for some time. It is possible that Amazon may extend this feature to allow used goods to be sold even if it does not offer them new - the current restriction. This would bring Amazon into greater competition with its arch rival in the e-commerce sphere, eBay , notably through eBay's fixed-price subsidiary

The big problem with the fixed-price sales of Amazon's Marketplace is that they lack the excitement of the auction process. It is partly this adrenaline buzz, which many people seem to derive from auctions, that makes eBay so successful. Undeterred, Amazon has come up with a new idea that it hopes may tap into the same psychology.

Called a "Gold Box", this is a series of five special offers that are available each day. Once you have seen the offer, you must decide within 60 minutes whether to buy or pass on to the next. There are extra discounts to tempt you into the fateful click, though so far I have found the array of ear hair clippers and bread-making machines on offer eminently resistible.

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