Amazon’s E-Commerce and Customer Purchase Phases

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Table of Contents

Introduction
Awareness Stage
Information Search Stage
Alternative Evaluation Stage
Purchase Stage
Post-Purchase Stage
Conclusion
References

Introduction

To a great extent, the rise of e-commerce platforms, including Amazon, which offers competitive prices and reliable shipping of items, has transformed how consumers make purchasing decisions. The clients can browse multiple commodities, read reviews, and buy products from the comfort of their homes. The purchasing biases positively impact the consumer’s behavior, making them buy products that meet their daily needs to improve their livelihood.

Awareness Stage

The initial phase of the customer purchase journey is the awareness phase, where the client is alert to the desire and need for a service or a product. The buyer may not know that there are possible alternative solutions to their problems and do not have a clear idea of the commodity they intend to purchase. One behavioral economics concept influencing a client’s decision-making process in e-commerce is the framing effect (Aiello et al., 2020). The heuristics in consumer behavior is determined by how a product is presented and can impact buyers’ perception. For instance, Amazon’s management emphasis on the merits of a product in its description could make it highly attractive to prospective consumers.

Scarcity is one of the cognitive biases in the Amazon e-commerce context that impacts the client’s buying decision. For instance, salespeople may present a commodity, such as an iPhone watch, as limited in availability to increase its perceived value and inspire customers to purchase it before it becomes rare in the market (Pizzutti et al., 2022). Scarcity may lead to anchoring bias, whereby the initial database seen by a customer regarding an item can anchor their viewpoint on its worthiness, even though the information may be irrelevant. For instance, if a rare product is first manifested as expensive, the clients consider it a high-quality item regardless of its actual benefits. There are multiple nudge techniques that Amazon’s management can deploy at the awareness stage, which are as follows:

Special discounts and promotions can attract clients towards particular products, mainly for scarce or time-limited commodities.
Amazon salespeople can feature certain items on the company’s “Today Deals” home page or in search results, thus nudging consumers to buy products they did not initially intend to purchase.

Information Search Stage

During the information search phase, the clients explore the database regarding the commodity or service they are interested in to make buying decisions. Notably, consumers can gather information through various sources, such as by visiting a physical store and undertaking online research (Pizzutti et al., 2022). One behavioral economics concept impacting a consumer’s decision-making process in e-commerce is hyperbolic discounting. Amazon’s management may attract clients by offering them immediate deals, gratifying them with the product’s short-term benefits instead of focusing on their long-haul value. Confirmation bias is inevitable during the information search phase, as consumers want to authenticate their pre-existing beliefs and preferences concerning a product. The heuristics of client behavior is that they believe that a particular brand, such as Amazon prime videos, is of high quality and seek more reviews to support their belief.

Confirmation bias may result in social proof, where other people’s opinions and experiences influence customers. The ratings and reviews from other consumers can offer social proof that a commodity is of high standards and worth purchasing (Klein et al., 2020). Nevertheless, scarcity is another fundamental bias impacting clients’ decisions while buying a product and may lead to social proof. The perception of limited availability of a particular product can increase its perceived value and drive massive purchases, causing clients to search for information concerning the commodities considered to be in short supply. One of the nudge strategies that Amazon’s executive team can apply during the information search phase is as follows:

The management team must ensure that Amazon’s recommendation engines use algorithms to suggest items that may interest clients based on their browsing history to influence their purchasing behavior.

Alternative Evaluation Stage

The alternative evaluation phase is the step in the consumer decision-making process, where clients have pinpointed a few options that they are interested in, making consumers assess such choices. The anchoring effect is one fundamental behavioral concept impacting a client’s buying decisions. The initial information about a product on Amazon’s e-commerce portal witnessed by a consumer affects their perception of the subsequent database regarding the product (Aiello et al., 2020). The customer’s heuristic behavior is that if a commodity is presented as costly, other options might seem highly affordable to contrast products that have been overpriced. Another crucial behavioral economic framework is the endowment effect, where the clients overvalue products they are familiar with, such as Amazon music, even though competitors offer better price alternatives.

Confirmation bias is inevitable during the alternative evaluation phase, where clients search for a database to approve their pre-existing beliefs about a product. For instance, consumers who believe that a particular brand, such as Versace, sells high-quality clothes may seek more pragmatic reviews concerning their products and ignore negative suggestions. After making a purchase, a client may feel highly attracted to the product they choose even though it has flaws, resulting in choice-supportive bias and making them face the challenge of comparing products objectively. Such cognitive purchasing discrimination may result in status-quo bias, whereby the consumers buy products from high-quality brands, such as Amazon prime (Klein et al., 2020). One of the nudge techniques that Amazon’s management can deploy at the alternative evaluation stage is as follows:

The executive team should offer comparison tools that enable clients to contrast different products grounded on various criteria, such as pricing and quality, to make it easier for customers to assess their options and make a decision.

Purchase Stage

In the e-commerce context of Amazon, one of the fundamental behavioral economic concepts is the scarcity effect, where their perception of the limited availability of an item increases its value, resulting in massive consumer purchases. The client’s heuristic decision-making behavior is that they are highly likely to buy a product that Amazon management has advertised to have restricted stock availability or present at a certain period only (Pizzutti et al., 2022). The loss aversion economic framework indicates that consumers are highly motivated to avoid losing privileges, such as limited-time discounts, making them make purchases they had not intended to undertake. For instance, Amazon management may offer free shipping for a particular time, making customers buy products to avoid losing the opportunity and save money.

Due to bandwagon bias, the clients are more likely to purchase a commodity if they see others buying it, assuming that it offers immense value. The bandwagon bias leads to social proof, where consumers are influenced by the actions of others, motivating them to buy a product based on its popularity (Klein et al., 2020). For instance, Amazon management may display customer ratings, reviews, and testimonials, on the product page, influencing the decisions of other clients who consider the commodity popular. The status quo bias is inevitable, mainly when the executive team offers Amazon as a default option, making it easier for consumers to continue with earlier subscriptions instead of canceling and seeking other buying options. One of the nudge strategies that Amazon’s management can deploy at the purchase stage is as follows:

The management must notify the client through short messages, particularly when they add a product to their cart, to motivate them to complete the purchase, thus influencing their behavior.

Post-Purchase Stage

During the post-purchase phase, the clients assess their buying after they have received and utilized the commodity. The confirmation bias behavioral economic concept indicates that a client may seek a database that authenticates their decision and rejects the information that contradicts their views (Aiello et al., 2020). For example, a client who bought an item on Amazon might concentrate on positive suggestions confirming their choices.

After purchasing a product, customers may develop feelings that they made the wrong decision. Therefore, regret aversion allows clients to alleviate such feelings by making them research information supporting their decision, even though it might be biased. For instance, Amazon’s “Verified Purchase” label on reviews could potentially alleviate such regret bias, as it indicates that the consumer has bought a particular commodity and has high chances of providing genuine reviews. Recency bias is the type of discrimination that occurs when the Amazon management sends an email to rate the product after purchasing it. One of the nudges approaches that Amazon’s leaders can deploy at the post-purchase stage is as follows:

The management must encourage the clients to rate the products they have purchased by sending them pop-up notifications and email reminders after logging into their accounts to attract more customers.

Conclusion

In conclusion, regarding Amazon’s e-commerce context, the company management has leveraged confirmation, social proof, scarcity, bandwagon, and framing effects to create an engaging shopping experience with their customers and influence their purchasing decisions. Amazon’s online platforms enable customers to browse multiple commodities, read reviews, and buy products from the comfort of their homes. The loss aversion economic concept indicates that customers are highly motivated to avoid losing privileges, making them make purchases they had not intended to undertake.

References

Aiello, G., Donvito, R., Acuti, D., Grazzini, L., Mazzoli, V., Vannucci, V., & Viglia, G. (2020). Customers’ willingness to disclose personal information throughout the customer purchase journey in retailing: The role of perceived warmth. Journal of Retailing, 96(4), 490-506. Web.

Klein, J. F., Zhang, Y., Falk, T., Aspara, J., & Luo, X. (2020). Customer journey analyses in digital media: Exploring the impact of cross-media exposure on customers’ purchase decisions. Journal of Service Management, 31(3), 489-508. Web.

Pizzutti, C., Gonçalves, R., & Ferreira, M. (2022). Information search behavior at the post-purchase stage of the customer journey. Journal of the Academy of Marketing Science, 50(5), 981-1010. Web.

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