Amazon.com customer and long-term growth first and profits second approach dictates how the company approaches every aspect of its business. Amazon.com chairman and CEO, Jeff Bezos’ remarks at a shareholder meeting held on May 17th, 2005 where he talked about Amazon’s continued growth of service offerings and international websites are in line with this philosophy. “All of these investments are expensive in the short term and they don't pay out for years. And in the short term that can put Wall Street into a kerfuffle," Bezos told reporters after the meeting. "It's our job to stay heads-down, focused on the customer experience, focused on the long-term, and not let that change our strategy.”
In 1998, Amazon launched the first of its global websites, with local sites “opening their doors” in the United Kingdom and Germany. By 2002, Amazon had entered into the top 6 e-commerce markets in the world and with their purchase of Joyo.com, the company entered into the Chinese market. As it has expanded into foreign markets, the company has used what Kotler and Armstrong refer to as an “adapted marketing mix” (pg 612). A customer accessing an Amazon website globally will have, for the most part, the same experience. The websites are laid out in much the same manner, many of the same technologies that are available to consumers that access Amazon.com are available to customers that access any of the other global websites, and customers can order items from any of the websites regardless of where they are physically located. The company has also tried to follow the same practices it uses in its fulfillment and customer care systems in the US, in the regions it has expanded into. Page 4 of the company’s 2004 Annual report talks highlights how the fulfillment and customer care services have been expanded global: We fulfill customer orders in a number of ways, including through our U.S. and international fulfillment centers and warehouses; through fulfillment centers operated under co-sourcing arrangements, including our fulfillment center supporting www.amazon.co.jp; through outsourced fulfillment providers, including our fulfillment provider supporting www.amazon.ca; and through other third-party fulfillment arrangements. We operate customer service centers globally, which are supplemented by several co-sourcing customer service arrangements with third parties. The operation of local fulfillment centers has helped to significantly reduce the cost of and shipping time for many US titles that international customers were ordering, as these products are now stored locally.
All of this expansion has not been without the need to modify its product offerings and consumer payment methods and the need deal with local laws and competition. German law dictates pricing for books. This causes considerable issues for Amazon, as it has built its brand on being able to offer customers products at a discount. To get customers to visit and use Amazon.de, the company offers a wide range of products offered a higher discounts that could be found at other on and off line retailers. According to a November 2002 inSight report Japanese online customers are extremely averse to using credit cards for payment of online purchese. To work around this, Amazon.co.jp instituted the ability to pay cash on delivery for online purchases in November 2001. Another example of how Amazon has had to work with local laws is with the creation of its Canadian site. Canadian law calls for majority Canadian ownership of book retailers. Amazon.com was able to get around this law, legally, because it does not have a Canadian office or Canadian employees. Furthermore, Amazon.ca orders are fulfilled by Toronto-based Canada Post and sourced from Vancouver wholesaler BookExpress. (Retail Forward). According to a July 12, 2004 Businesweek.com article, Amzon.fr is facing fierce competition from local retailers, FNAC.com, Cdiscount,.com, and bookseller Alapage. Analysts say FNAC and other French-owned companies benefit from familiar brand names and, in some cases, better selection or lower prices than Amazon.
All of this work has proven to financially beneficial to Amazon’s bottom line. By 2004, international sales (all non-US regions except Canada) accounted for 44% of net sales and almost 33% of gross profit. Amazon believes that in the near future, international sales will account for 50% of net sales. Will this be achievable? With the continued growth in offerings, comes increased cost. These costs, along with other variables that come from international operations (currency fluctuations, taxes, etc.) make it seem that Amazon will need to re-evaluate its offerings (products and partnerships) if the 50% goal is to be achieved.