Online retailer Amazon.com recently blew out revenue estimates by posting a 28% rise in quarterly revenue to $5.45 B for Q3 2009. According to the conference call transcript (source), the improvements were due to a few factors, including:

• Continued focus on Amazon’s value proposition: low prices, expansion of selection, convenience, and good in-stock levels.
• Availability of Amazon Prime program, which allows customer to enjoy “all-you-can-eat” fast shipping on eligible purchases for an annual membership fee of $79.

Amazon has leveraged their low prices to attract buyers. While pricing is important to these visitors, the online customer experience helps convinces them to complete the purchase vs. going to a rival retailer. For example, Amazon monitors when a customer drills down on to a specific product and uses email to send them special pricing for that item if they don’t purchase it. Amazon has been able to expand their selection of products by offering better tools to sellers, which is another area that Amazon invests heavily to keep their brick-and-mortar competition in check. In addition to these, there are many other feature that Amazon has refined over the years to improve the online experience (view analysis of Amazon’s online experience).

According to a 2008 study by ServiceXRG (source), customers are 3X more likely to to buy a product or service and 4X times more likely to recommend the company or renew the relationship if they have a positive experience. The recent quarter at Amazon is a testament that you can own the market place by implementing only a few simple, fundamental changes.