Amazon Pleases Customers with This Automation Strategy

The last century has seen enormous leaps in progress across all aspects of life, with the help of automation — creating a machine, or system, that is capable of taking over a job that was once done by human hands and not only doing it better, but faster, more efficiently, and for a lot less. Automation has come so far that now, Amazon.com (NASDAQ:AMZN), is using it to dole out money back to its customers.

Customers are the main core of Amazon’s business. As one of the most powerful retail forces in the world, its growth depends on satisfied customers. To ensure that people are getting their money’s worth, Amazon has devised an system that can detect when a customer has not paid the lowest price for an item, or if the quality of the streaming (for Amazon’s instant video) is poor – and it will reimburse the customer automatically.

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Amazon has placed an enormous emphasis on investing in company infrastructure, at the expense of near-term profits. Some $18.5 billion have been spent on digital media, fulfillment centers, and cloud computing. Investors have apparently been quite happy with the decisions, as the company’s stock has doubled in value over the last three years, and the market value for the company is 700 times  the earnings for Amazon at the end of last year, making it the highest value-to-earnings ratio on the S&P 500 index.

“We lower prices and increase value for customers before we have to,” Bezos said in his annual letter to shareholders. “We invent before we have to. These investments are motivated by customer focus rather than by reaction to competition.” If a movie streams poorly, Amazon will send at least a portion of the cost back. If the cost of an item drops between order and delivery, the buyer will be given the difference.

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This kind of attention to detail and commitment to customers is how Jeff Bezos, who founded Amazon in 1994, was able to grow the company into what it is today. So what does the largest online retailer pay its founder and CEO? Last year, after compensation for security expenses and travel, Bezos walked away with a little more that $81,000 — fractional when compared with other Wall Street compensation packages.

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