When the all-encompassing history of online retail is written, it is likely that the author will identify trust – or absence thereof – as perhaps the biggest initial factor inhibiting the growth of ecommerce. Fears around credit card security have largely been dealt with by banks’ continually tightening up procedures, but the main issue remains: you’ve paid somebody for something that still has to be sent to you. What happens if they either don’t send it, or send a product that doesn’t do what it’s supposed to?
On almost every measure Amazon.com is the ecommerce benchmark, and for good reason. We had reason to contact Amazon recently about a faulty Kindle. Within two hours of the telephone conversation they had despatched a new device, along with instructions for returning the faulty one.
True to form, within a couple of hours of us sending them the tracking number for the Kindle we were returning, the cost of the airmail postage had been deposited into our credit card. And, within four days of reporting the problem, a brand new device arrived by air freight.
I’ve always thought that one should measure customer service levels not on companies getting it right (because that’s what is expected of them), but on how they deal with the unhappy situation of things going wrong. Amazon came through with flying colours.
What’s interesting is the way they reversed the trust dynamic; it became a case of them trusting us to return the Kindle, which is the opposite of how the internet trust thing normally operates.
Amazon is currently on a P/E ratio of over 50 (think about that; they would have to trade for half a century before their profits have recouped your investment in their shares!), which implies that a huge amount of brand premium and expected future growth has been built into the share price.
Effectively, investors are trusting Amazon to continue growing its business in a way that will generate escalating profits. As customers, we trust Amazon to deliver what it says it will.
Regardless of who writes the history of online retailing, one thing’s for certain; Amazon wrote the manual.