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Posting Date: August 25, 2002
 

They Keep Growing ... and Growing -- "The U.S. Department of Commerce... says that second-quarter 2002 retail e-commerce sales were an estimated $10.243 billion, an increase of about 24 percent from the second quarter of 2001." (MadMan comments: ...and yet Amazon can't turn a profit. From a meagre $5 million dollar profit in the quarter ending December 2001, they have plunged and have been bleeding again in the last two quarters. Have they expanded too much into too many unrelated areas? What can they do to actually make money? If the no. 1 e-commerce retailer, with billions in annual turnover, can't make a cent in profit over the course of 7 years, isn't that pathetic business management? Incidentally, their much-praised user experience hasn't saved them.)

 

  

Reader Comments...
 

MadMan, your last comment is the most important. I am definitely starting to think that a great user experience is only moderately important.

HERESY!!

Functionality, content, aesthetic appeal, branding, and so forth, are important. Usability folks, including me in the past, seem to think that usability solves everything. Not true. Usability is great and offers a competitive advantage, but only as a slim margin. It cannot overcome many other issues and that is why Amazon is a great web site that cannot turn a real profit.

Note: I own a small bit of Amazon stock...

Posted by: John S. Rhodes on August 25, 2002 06:19 PM

 

As a user experience consultant myself, I will never deny the competitive advantage of a great user experience.

The problem is that a great user experience is a big asset only when other aspects of business strategy and management are sound.

For instance, If SiteX and SiteY both sell books online at the same price (and same delivery time, etc.), and SiteX has great usability, then SiteX will definitely do great business.

But suppose SiteX decides to drop prices by 30%, eliminating their profit margin completely, then all the usability in the world won't automagically dump cash in the bank for them. SiteY, with poorer usability, may actually survive because they make money for fuelling growth.

Incidentally, I have ignored user experience for cheaper prices. There are a handful of book sites in India, but I have suffered the pathetic site design of a particular site because I found books 20% cheaper there. I was willing to make that sacrifice. E-commerce is often a price game.

Does user experience make a difference? Of course it does. But not to the exclusion of all else that goes into making a business succeed.

Theoretically, I could make the world's most usable calculator app for Windows and sell it for $10. But the usability won't help me because a FREE calculator app ships with Windows. Does that sound sensible?

Posted by: MadMan on August 25, 2002 06:31 PM

 

It is funny that usability experts limit their ideas of usability to the web site itself.

User experience transcends the web... Amazons glitch is the return policy. I don't know how many people have told me the biggest gripe on the web is returning things. blaaaah!. It is such negative user experience and at the end of the day, all hype aside people want the ability to go and bitch to a sales person when things are going wrong.

I also want to touch and feel what I buy, play with it, push buttons etc…I just think the glory days are over and people are also over the unfulfilled promises. I shop online, but only if I can’t find the good elsewhere or if I see such a bargain that I can wait the extra time to get it.

Basically, I think peoples mindsets have changed…. Higher unemployment = more time to do things. 9/11 = putting life into perspective.

Posted by: JB on August 25, 2002 08:43 PM

 

John, I posted my comment without reading your linked article, but after a casual glance, I found this statement:

I would bet that users would be more likely to buy books because they were easy to purchase and had reviews readily available, than if they were 30% off versus 20% off. Saving a couple of bucks, for the majority of users, is significantly less compelling than a good review and a good overall shopping experience.

I strongly disagree with that statement. If I'm buying a commodity like a book, the quality of the product is consistent from one store to the next, and if I can buy one for $15 versus $20, hell I'm going to buy from the $15 shop. If I'm buying more books and the price advantage is significant, I'll put up with fewer site features.

JB, I never said that user experience is limited to the web site. That's why I don't call myself a "usability person". I've advocated the importance of sound marketing and business strategy many times on Webword. To me, user experience is a combo meal - content, IA, interfaces, usability, marketing & branding, CRM, and Net strategy. For instance, if I were working with a client, I wouldn't just limit myself to improving the usability of a section. I would actually question whether the section should even exist. (Simplified example to fit into this space.) I'd also wonder if promoting ProductX on the home page instead of ProductY makes business sense. I incorporate management wisdom into my work, which is the only sensible way to do things. Making that deep discount item easily findable is not that important if it's going to bleed the company.

Posted by: MadMan on August 26, 2002 01:57 AM

 

I hate to rub it more in your face, John, but you also say:


I'll give you some Year 2001 Predictions. Here are today's closing stock prices of the customer focused companies I mentioned above. Come back in about a year and see if I am correct. See if these companies are doing significantly better, and see if their stock prices are higher:

Amazon: 15 3/16
Yahoo: 25 5/8
AOL: 37.66

Ahem, looking at current stock prices, we find:
Amazon is about the same
Yahoo is less than half of that year's level
AOL is about a third of the price then

Wither user experience benefits, John?

(I'm from India and so don't use AOL, but do they really offer a great experience? Isn't this the company that shipped a crummy browser and an even crummier email client, tried to confine net access to its own network, and displays waves of pop-up ads? Somebody correct me if I'm wrong.)

Posted by: MadMan on August 26, 2002 02:07 AM

 

MadMan, you made my point exactly. I was thinking about my predictions just the other day and how I was dead wrong. Granted, the market has been taking a beating. But still, does a good user experience really help more than other measures? Marketing, operations, and so forth.

Don't worry folks, I still believe that there are many benefits of usability! I just want everyone to know that there are other things to consider than a good user experience. No usability professional should tell you that usability is the answer. There are many paths to success; always many factors.

Posted by: John S. Rhodes on August 26, 2002 07:27 AM

 

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